Wall Street recovers on the third day as investors focus on incentives

Mar 26, 2020 8:30 PM ET

(Reuters) – Wall Street rebounded to a third consecutive session on Thursday when weekly unemployment claims fell among the worst fears among investors and investors focused on an unprecedented $ 2 trillion incentive focused on the US House of Representatives approval pending.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) on March 20, 2020 in New York, United States. REUTERS / Lucas Jackson

The number of Americans applying for unemployment benefits rose to 3.28 million last week as nationwide bans halted the economy and triggered a wave of layoffs.

The average expectation of analysts interviewed by Reuters was 1 million claims, but the upper end of the forecast was 4 million.

Expectations are high that the US House of Representatives will adopt the stimulus package to support distressed industries, including airlines, after the Senate approved the proposal.

It would flood the country with cash to curb the economic impact of an escalating pandemic that killed around 1,000 and infected nearly 70,000 in the United States.

The S&P 500 benchmark was back on three consecutive winning days for the first time since mid-February before fears of the coronavirus stopped Wall Street’s 11-year bull market. The S&P 500 has risen almost 15% since Monday, although it still fell 24% from its record high of February 19.

“It’s encouraging to see people buy a day after a big uptrend because we haven’t seen it in a month,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “It doesn’t guarantee that the floor is in place, but it does indicate a floor process.”

Delta Air Lines DAL.O rose 5.2%, while Boeing (PROHIBITION) grew 14%, supported by a $ 58 billion accrual for the aerospace industry in the most recent aid bill. Boeing has increased over 90% in the past four sessions.

Federal Reserve chairman Jerome Powell said the central bank is ready to act “aggressively” to support market lending, in addition to the unprecedented policy easing announced on Monday.

“He said the Fed would not run out of ammunition and the committee still had political leeway for further action,” said Charalambos Pissouros, senior market analyst at JFD Group in Cyprus.

“By saying that he raises the question – will they opt for negative interest rates?”

Given that macroeconomic indicators are expected to deteriorate in the second quarter as business activity collapses and fears of corporate failure suggest a deep global recession, many analysts expect further wild market volatility.

The CBOE volatility index fell 4.9 points, but was still well above the 2018 and 2019 levels.

At 2:44 p.m. ET, the Dow Jones Industrial Average .DJI rose 4.82% to 22,222.22 points, while the S&P 500 .SPX rose 4.67% to 2,591.13.

The Nasdaq Composite .IXIC rose 4.03% to 7,681.73.

The S&P Utilities Index .SPLRCU was the strongest among 11 sectors and rose 7.2%.

The progressive emissions exceeded the declining emissions on the NYSE with a ratio of 5.15 to 1. At Nasdaq, a ratio of 3.71 to 1 favored the advanced.

The S&P 500 had no new 52-week highs or new lows. The Nasdaq Composite posted 4 new highs and 13 new lows.

Reporting by Noel Randewich, additional reporting by Uday Sampath and Medha Singh in Bengaluru and Ross Kerber in New York; Editing of Bernadette Baum

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