Stocks End Chaotic Week With Biggest Gain Since 2008, S&P, Dow Soar 9%
Confirmed cases of the coronavirus in the United States continued to grow at an alarming rate this week
Topline: Fresh off their worst losses since 1987, U.S. stocks rebounded sharply following President Trump’s announcement that the coronavirus pandemic would be declared a national emergency, a move that will free up as much as $50 billion in federal aid to help combat the crisis.
- At the close of markets on Friday, just minutes after President Trump began speaking, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite all soared by about 9.3%.
- The CEOs of major U.S. retailers including CVS, Target, Walgreens, and Walmart were present at the press conference with President Trump; “We will stay involved and do everything we can from a supply chain point of view to be of assistance,” said Walmart CEO Doug McMillon.
- Trump said he will waive interest on student debt, and that he has directed the Department of Energy to buy “large quantities” of crude oil for the Strategic Petroleum Reserve; WTI Crude saw a bump from the announcement and ended the day up 4.5%.
- Investors are still anxiously awaiting a coronavirus relief bill; both Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi have indicated that the bill’s passage is imminent.
- Despite Friday’s rally, stocks are still in the red for the week, with the Dow down 10%, while the yield on the 10-Year U.S. Treasury bond rose 28% this week to 0.981% and the VIX Index fell back to about 57 from a high of 77.54 earlier this morning.
Key background: Confirmed cases of the coronavirus in the United States continued to grow at an alarming rate this week, with more than 1,741 infected and 41 people dead as of Friday. Many companies are implementing mandatory work from policies, and others, like Norwegian Air, are already beginning to lay off workers. Italy remains on lockdown, while South Korea reported more recoveries from the virus than new infections for the first time since the outbreak began in January.
Big number: Google jumped up 9% after President Trump praised it for a new coronavirus testing website.
Tangent: Russia and Saudi Arabia entered a full-out price war over oil production this week after negotiations over supply cuts to prop up the industry fell apart. Saudi Arabia said it will ramp up production to a record 12.3 million barrels per day, and the United Arab Emirates followed suit, promising to boost its own capacity to 5 million barrels per day. Oil prices plummeted through the week but ended the day on Friday up about 4.5%.
Crucial quote: “While it is hard to tell when and where the market will bottom, we do know that the market has always recovered from bear markets,” says Lindsey Bell, Chief Investment Strategist at Ally Invest. “However, it may take a while to get back to new highs – the S&P 500 has taken an average of eight months to recoup losses in all bear markets since 1946. Bear markets are unnerving, but history shows stocks eventually recover.”