U.S. stocks surged Wednesday on optimism for another round of stimulus relief and signs that the toll from coronavirus may be peaking soon, which could perhaps get the economy rolling again.
Investors are hoping this latest bull run holds in what has been a season of roller-coaster swings on Wall Street as the coronavirus continues to claim more lives and stifle business and trade around the world.
Wednesday’s rally lifted the S&P 500 3.4%, a 23 percent rise above its March 23 low, according to Bloomberg.
The closing bell rang shortly before the U.S. death toll surpassed the 14,000 mark.
The Dow Jones Industrial Average closed up 779.71 or 3.44% to 23,433.57.
The NASDAQ composite index was up 203.64 or 2.58% to 8,090.90.
The S&P 500 was down 90.57 or 3.41% to 2,749.98.
It’s the latest about-face in this brutally volatile stretch for the U.S. stock market, which has flip-flopped between gains and losses for six straight days. The up moves have recently been bigger than the downward swings, though, amid signs that deaths and infections may be nearing a peak or plateau in some of the world’s hardest-hit areas.
The gains began early, with stocks opening higher despite persisting uncertainty about the outbreak.
»TUESDAY'S CLOSE: Wall Street rallied early, but huge gains vanished by end of day
Wednesday's boost was driven primarily by a White House plan to pour assistance into the nation's smaller cities that have been impacted less by the outbreak before reopening the harder hit metropolitan regions, according to a report by Markets Insider. The plan is still being developed but offers the first glimmers of an end-game to the prolonged economic crisis.
All three major U.S. indexes were humming at the opening bell.
Other signs
The market jump came amid a report released Wednesday by the World Trade Organization which predicts global trade will plunge by up to a third in 2020 due to the pandemic.
According to the forecast, the range of global decline will fall somewhere between 13% and 32%, followed by a rebound in 2021 of 21% to 24%.
But all that depends on how effective the government’s economic and health measures are in mitigating the outbreak.
Previously
Wall Street was on a rally early Monday but that proved short-lived in a market dominated by sharp swings responding to the ups and downs of the news about the pandemic.
“The recent risk rally faded quickly despite recent stimulus efforts from both monetary and fiscal authorities, with market players coming to terms with the unabated rise in fatalities as the virus continues to spread,” Prakash Sakpal and Nicholas Mapa, economists at ING, said in a report.
Even though economists say a punishing recession is inevitable, some investors are hoping a peak in new infections might provide clues about how long and durable the downturn might be. But more economic misery is on the horizon, and some experts say we may have not seen the worst.
Many professional investors say they’ve been wary of a recent upsurge in share prices and expect more bouts of volatility. The S&P 500 has rallied nearly 19% since hitting a low on March 23, though it’s still down 21.5% from its record set in February.
What’s next
Economists expect a report on Thursday to show that 6 million Americans applied for unemployment benefits last week as layoffs continue to sweep the country. That would bring the total to 15 million or more over the past three weeks. Analysts also expect big companies in upcoming weeks to report their worst quarter of profit declines in more than a decade.
Credit: U.S. Department of Labor
Credit: U.S. Department of Labor
Across Europe
France’s CAC 40 index dropped 1.5% to 4,371 after the national central bank said the economy was in recession and was estimated to have contracted by 6% in the first quarter. Germany’s DAX slipped 0.9% to 10,265 and Britain’s FTSE 100 shed 1.2% to 5,638. U.S. shares appeared set for small gains, with the futures for the Dow industrials and the S&P 500 up 0.5%.
In currency markets, the dollar inched up to 108.92 Japanese yen from 108.80 yen Tuesday. The euro slipped to $1.0870 from $1.0892 .
Asia and Japan
In Asia, Japan’s state of emergency kicked in and focused on seven urban areas, including Tokyo, with strong government requests for people to stay home and restaurants and stores to close for a month. It was unclear how effective the entirely voluntary measures would be.
Japan’s Nikkei 225 gained 2.1% to 19,353.24, on stronger than expected machinery orders.
India's Sensex lost 0.6%. Shares rose in Taiwan and Malaysia but fell in other Southeast Asian markets.
Goldman Sachs said in a report that Japan’s economy is headed to a record 25% contraction in the current quarter, with exports diving by 60% in the April-June period. The contraction for the world’s third largest economy would be a record, since GDP, or gross domestic product, began to be tracked in 1955.
Japan’s economic activity will likely recover with the third quarter and GDP is expected to grow 3.1% in 2021, it said.
In other Asian trading, Australia’s S&P/ASX 200 shed nearly 0.9% to 5,206.90, while South Korea’s Kospi lost 0.9% to 1,807.14. Hong Kong’s Hang Seng fell 1.2% to 23,970.37 and the Shanghai Composite dipped 0.2% to 2,815.37.
Movement on oil
Benchmark U.S. crude oil rose $1.46, or 6.2%, to settle at $25.09 a barrel Wednesday. Brent crude oil, the international standard, rose 97 cents, or 3%, to $32.84 a barrel.
Wholesale gasoline rose 3 cents to 68 cents a gallon. Heating oil fell 2 cents to $1.01 a gallon. Natural gas fell 7 cents to $1.78 per 1,000 cubic feet.
Gold rose 60 cents to $1,684.30 an ounce, silver fell 27 cents to $15.21 an ounce and copper fell 1 cent to $2.26 a pound.
The dollar fell to 108.84 Japanese yen from 108.85 yen. The euro fell to $1.0862 from $1.0904.
Oil got a boost from comments by President Donald Trump to Fox News that he expects Russia and Saudi Arabia to resolve their price war. U.S. crude had fallen $2.45, or 9.4%, to settle at $23.63 per barrel Tuesday.
While many investors are preoccupied with the pandemic, energy remains another major factor driving trading.
The meeting of the so-called OPEC+ is due to be held on Thursday. It was delayed amid bickering between Saudi Arabia and Russia following a meeting in March where OPEC and other nations led by Russia failed to agree to a production cut to reflect collapsing demand due to the pandemic. Prices then plunged.
Even Thursday's meeting was in doubt after Iran demanded greater clarity on the scale of U.S. oil production before talks can start.
For “more immediate market stability concerns, all eyes and ears remain trained on the success of the OPEC+ meeting on Thursday," Stephen Innes of AxiCorp said in a commentary.
— Yuri Kageyama was the principal writer of the world economic report for The Associated Press. Stan Choe and Alex Veiga also contributed for AP.
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