U.S. stocks rebounded strongly Wednesday after two days of losses, boosted by a rebound in oil markets and the U.S. Senate passing an additional $483 billion in aid to small business owners and hospitals as the coronavirus pandemic’s mounting economic damage continued to loom for investors.
A day after a historic plunge,U.S. crude jumped after President Donald Trump threatened the destruction of any Iranian gunboats that harass U.S. Navy ships, raising the possibility of a disruption to oil supplies.
The Dow Jones Industrial Average closed up 456.94 or 1.99% to 23,475.82.
The NASDAQ composite index was up 232.15 or 2.81% to 8,495.38.
The S&P 500 was up 62.75 or 2.29% to 2,799.31.
All three indexes were in the green from the opening bell, although the broader S&P 500 was still down for the week.
Energy companies, which are still in deep trouble with the price of oil this low, posted some of the bigger gains. In another encouraging sign of waning pessimism in the market, Treasury yields rose.
Benchmark U.S. crude oil for June delivery rose $2.21, or 19.1%, to close at $13.78 a barrel Wednesday. Brent crude oil, the international standard, rose $1.04, or 5.4%, $20.37 a barrel.
Wholesale gasoline rose 13 cents to 64 cents a gallon. Heating oil was little changed at 73 cents a gallon. Natural gas rose 12 cents to $1.94 per 1,000 cubic feet.
The stunning crash of oil over the previous two days had shaken investors, who economists warned earlier were too optimistic, because it adds to evidence of the depth of a global downturn with factories idled and consumers ordered to stay home.
The plunge in oil prices “has stirred wider concerns of a sharp economic slowdown,” Hayaki Narita of Mizuho Bank said in a report.
On Tuesday, the S&P 500 fell 3.1% and the Dow lost 2.7%.
Major factors for investors
On Tuesday, the U.S. Senate approved a virus aid bill worth nearly $500 billion. It would provide more loans to small businesses and aid to hospitals.
Georgia’s governor, meanwhile, announced plans late Monday to allow gyms, hair salons and other businesses to reopen as early as Friday.
Still, economic data are bleak. A report Tuesday showed the steepest drop for U.S. sales of previously occupied homes since 2015.
Pessimists say the market’s rally has been overdone and that a premature reopening of the economy could lead to only more flareups of infections.
Treasury yields fell further, indicating investors were shifting more money into bonds as a safe haven. The yield on the 10-year Treasury, or the difference between the market price and what a buyer will be paid if a bond is held to maturity, dropped to 0.55% from 0.62% late Monday.
The latest on oil
On Monday, the price of a U.S. barrel to be delivered next month fell to below zero. That meant traders were paying others to take it off their hands so they wouldn’t need to find places to store the swelling surplus.
The price for oil to be delivered in June didn’t hit zero, partly because storage isn’t as pressing a problem.
Brent crude, the price standard for international oils, lost another $1.90 cents to $17.43 per barrel in London. On Tuesday, it fell 24.4% to $19.33.
“Global markets are struggling mightily with a temporary but overwhelming demand drop,” said Stephen Innes of AxiCorp in a report. He said the June contract also could “fall prey to storage infrastructure saturation.”
Around the world
Global oil demand is set to drop to levels last seen in the mid-1990s. Producers can’t slow their production fast enough. Storage tanks are running out of room.
In early trading, London’s FTSE rose 0.8% to 5,690.83 and the DAX in Frankfurt gained 1% to 10,358.34. The CAC 40 in France added 0.5% to 4,380.47.
In Asia, Tokyo’s Nikkei 225 fell 0.7% to 19,137.95. The Shanghai Composite Index closed up 0.6% at 2,843.98 after spending the day swinging between gains and losses.
The Hang Seng in Hong Kong added 0.4% to 23,893.36. The Kospi in Seoul rose 0.9% to 1,896.15 and Sydney's S&P-ASX 200 was unchanged at 5,221.20. India's Sensex rose 1.8% to 31,177.71. New Zealand's main index rose 1.1% and Jakarta gained 1.5%. Singapore was down 0.2%.
— Compiled and edited by ArLuther Lee for The Atlanta Journal-Constitution.
