Wall Street rallies on hopes for slowing economic pain
Stocks climbed in early trading on Wall Street Thursday as reports suggested that even though the economy is still suffering severely, the pace of pain may be decelerating.
The S&P 500 was up 1% after the first half hour of trading, following up on similar gains in Europe. Oil prices also rose, but other areas of the market were more hesitant, including bonds and Asian stocks.
The day’s headliner economic report showed another 3.2 million U.S. workers applied for jobless benefits last week, bringing the total over the last seven weeks to 33.5 million. It’s a shocking number, but it’s also the fifth straight week that it has declined since hitting a peak in late March.
Several companies also on late Wednesday cited signs that the worst may be behind them, at least in some parts of their businesses, though more weakness is still definitely on the horizon.
The Dow Jones Industrial Average was up 262 points, or 1.1%, to 23,909, as of 10:12 a.m. Eastern time. The Nasdaq was up 1.1% and has recovered nearly all its losses for 2020.
Stocks have been generally pushing higher since late March, when the number of weekly jobless claims hit its peak, as investors look ahead to a future that’s not as bad as the horrific present.
The global economy is sliding into a severe recession after economies worldwide shut down in hopes of slowing the spread of the coronavirus. But countries and some U.S. states are laying out plans to relax restrictions, which has investors anticipating a resumption of growth later this year.
The S&P 500 has more than halved its 34% loss from February into late March, though many analysts say the rally has been overdone given how much uncertainty still exists about how long the recession will last.
Lyft jumped 20% after it said late Wednesday that ride levels appear to have steadied after hitting a bottom in the second week of April. Over each of the three weeks since then, the number of rides has grown from the prior week, though they’re still down more than 70% from a year earlier.
Waste Management rose 4% after it said it’s seen slowing declines in some areas of its business, even as it pulled its financial forecasts for 2020 given all the uncertainty created by the pandemic.
Stocks whose fortunes are most closely tied to the strength of the economy helped lead the market. Energy stocks in the S&P 500 rose 3.1% for the biggest gain among the 11 sectors that make up the index. Financial stocks were close behind at 2.9%. They have been the hardest-hit areas this year on worries that the recession is erasing demand for oil and could lead to a wave of loan defaults for banks.
In Europe, gains were widespread for stocks. France’s CAC 40 rose 1.3%, and Germany’s DAX returned 1.2%. The FTSE 100 in London added 1.3%.
Encouraging showed a 3.5% rise in exports for China in April, driven by electronics shipments and textiles, which included a surge in mask exports.
Forecasters warned that strength is unlikely to last as the coronavirus pandemic depresses global consumer demand.
Comments by President Donald Trump raising the possibility of further trade friction with Beijing have worried investors hoping for better times as other economies begin to reopen from pandemic shutdowns.
Most Asian markets slipped Thursday, though Japan’s Nikkei 225 gained 0.3% after reopening following its Golden Week holidays. South Korea’s Kospi was close to flat, while Hong Kong’s Hang Seng fell 0.7%. Stocks in Shanghai slipped 0.2%.
Benchmark U.S. crude rose 9.2% to $26.20 per barrel. Brent crude oil, the international standard, gained 5.7% to $31.41 per barrel.
The yield on the 10-year Treasury fell to 0.69% from 0.71% late Wednesday. Yields tend to fall as investors are downgrading their expectations for economic growth and inflation. It had climbed strongly a day before after the U.S. government gave an update on how it.’
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