Wall Street Leaps 7% Monday 04/06 15:48
Investors grabbed hold of a few glimmers of hope Monday that the coronavirus
pandemic could be slowing and sent stocks surging in a worldwide rally, capped
by a 7% leap for the U.S. market.
NEW YORK (AP) -- Investors grabbed hold of a few glimmers of hope Monday
that the coronavirus pandemic could be slowing and sent stocks surging in a
worldwide rally, capped by a 7% leap for the U.S. market.
The number of new coronavirus cases is dropping in the European hotspots of
Italy and Spain. The center of the U.S. outbreak, New York, also reported its
number of daily deaths has been effectively flat for two days. Even though the
U.S. is still bracing for a surge of deaths due to COVID-19 and New York's
governor said restrictions should stay in place to slow its spread, the sparks
of confidence were enough to launch the S&P 500 to its best day in nearly two
The gains accelerated throughout the day, and markets in Europe and Asia
rose nearly as much. In another sign that investors are feeling a bit less
pessimistic about the economy's path, they sold bonds. The yield on the 10-year
Treasury rose for the first time in four days.
"We're running on raw optimism, maybe that's the best way to put it," said
Randy Frederick, vice president of trading and derivatives at Schwab Center for
Investors have been waiting anxiously for signs that the rate of new
infections may hit its peak, which would give some clarity about how long the
upcoming recession will last and how deep it will be. Without that, markets
have been guessing about how long businesses will remain shut down, companies
will lay off workers and flights remain canceled due to measures meant to slow
the speed of the outbreak.
"The virus is not everything, it's the only thing, and nothing else really
matters" to the markets, Frederick said, particularly in a week that is
relatively light on economic reports.
The S&P 500 climbed 175.03, or 7%, to 2,663.68, and nearly all the stocks in
the index were higher. It more than recovered all its losses from the prior
week, when the government reported a record number of layoffs sweeping the
The Dow Jones Industrial Average shot up 1,627.46 points, or 7.7%, to
22,679.99, and the Nasdaq rose 540.15, or 7.3%, to 7,913.24.
The latest gains are not likely to have much staying power, given how much
uncertainty remains about when the pandemic will subside significantly and how
much harm will have been inflicted to the economy, said Nela Richardson,
investment strategist at Edward Jones.
"It's not unusual, if you look back historically, within bear markets to
have rallies," Richardson said. "I wouldn't take the uptick over the last two
weeks as a sign of a bottoming or a sign of upside recovery from here on out.
There's still a lot of uncertainty to get through even as we're hopefully
nearing the peak in terms of new coronavirus cases."
The S&P 500 is still down more than 21% since its record set in February,
but the losses have been slowing since Washington promised massive amounts of
aid to prop up the economy.
"Since this is a public health crisis, the response has been extreme,"
Morgan Stanley strategists wrote in a report. "There are literally no governors
on the amount of monetary or fiscal stimulus that will be used in this fight."
In Japan, the prime minister said he's preparing to announce a 108 trillion
yen ($1 trillion) package to bolster the world's third-largest economy. It
would be Japan's largest-ever package for the economy and nearly twice as much
Japan's economy was already shrinking late last year before the outbreak
forced the global economy into a protective coma induced by health authorities.
The announcement pushed Japan's Nikkei 225 index to surge 4.2%. Elsewhere in
Asia, South Kora's Kospi jumped 3.9%, and Hong Kong's Hang Seng rose 2.2%.
In Europe, Germany's DAX rose 5.8% and France's CAC 40 jumped 4.6%. The FTSE
100 in London rose 3.1%.
The yield on the 10-year Treasury yield rose to 0.66% from 0.58% late
Friday. Yields tend to rise when investors are raising their expectations for
economic growth and inflation.
Crude oil fell, giving up some of its huge gains from the prior week when
expectations rose that Saudi Arabia and Russia may cut back on some of their
Demand for oil has plummeted due to the weakening economy, and any cutback
in production would help prop up its price. A meeting between OPEC, Russia and
other producers initially planned for Monday, though, was reportedly pushed
back to Thursday.
Benchmark U.S. crude fell $2.26, or 8%, to settle as $26.08 a barrel after
surging nearly $7 last week. It started the year above $60 per barrel. Brent
crude, the international standard, lost $1.06, or 3.1%, to $33.05 a barrel.