Stocks Register Three-Peat of Gains, Shrug Off Jobless Claims Spike……
U.S. stocks recorded the first three-day winning streak since the COVID-19 pandemic began to decisively disrupt the global markets. Equities reversed to the upside in pre-market trading shortly after data showed a spike to a record high in jobless claims, suggesting a bigger surge may have been feared. The resiliency was also likely fueled by the massive fiscal and monetary policy measures from Congress and the Federal Reserve recently, possibly cooling concerns about the increased likelihood of a sharp economic downturn as the support could shorten the duration of the damage. Last night, the Senate approved a $2.0 trillion “phase three” fiscal package that is heading for the House as soon as tomorrow, while the Fed earlier this week unloaded a drastic amount of monetary policy support. Treasury yields were lower, crude oil prices fell and the U.S. dollar continued to give back a recent jump, while gold was higher. In other economic news, Q4 GDP growth was unrevised at a 2.1% pace. Micron posted upbeat quarterly results and Ford shrugged off a credit rating downgrade by Standard & Poor’s to junk status. Asia finished mixed and Europe overcame early pressure to finish higher.
The Dow Jones Industrial Average jumped 1,352 points (6.4%) to 22,552 the S&P 500 Index surged 155 points (6.2%) to 2,630 and the Nasdaq Composite rallied 413 points (5.6%) to 7,798. In heavy volume 1.6 billion shares were traded on the NYSE and 3.9 billion shares changed hands on the NASDAQ. WTI crude oil dropped $1.89 to $22.60 per barrel and wholesale gasoline was off $0.01 at $0.60 per gallon. Elsewhere, the Bloomberg gold spot price advanced $13.97 to $1,630.86 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—tumbled 1.7% to 99.31.
Weekly initial jobless claims spiked by 3,001,000 to a record of 3,283,000, well above the Bloomberg estimate of 1,700,000, from the prior week’s upwardly-revised 282,000 level. The four-week moving average jumped by 765,750 to 998,250, while continuing claims rose by 101,000 to 1,803,000, north of estimates of 1,791,000. A dramatic rise in unemployment claims was anticipated, given the unfolding COVID-19 crisis.
The final look (of three) at Q4 Gross Domestic Product the broadest measure of economic output, showed a quarter-over-quarter (q/q) annualized rate of growth of 2.1%, unrevised from the first revision to match the Bloomberg consensus forecast and Q3’s rate. Personal consumption was upwardly revised to a 1.8% increase, versus expectations for it to remain at a 1.7% gain. Q3 consumption was unrevised at a 3.2% rise.
On inflation, the GDP Price Index was unrevised at a 1.3% increase, matching estimates, while the core PCE Index, which excludes food and energy, was adjusted to a 1.3% increase, versus forecasts to be unrevised at a 1.2% gain.
The advance goods trade balance showed that the February deficit narrowed more than expected, coming in at $59.9 billion, versus estimates of $63.4 billion. January’s deficit was upwardly-revised to $65.9 billion.
Preliminary wholesale inventories declined 0.5% month-over-month (m/m) for February, compared to expectations of a 0.2% decrease, and matching January’s downwardly-revised drop.
The March Kansas City Fed Manufacturing Activity Index fell deeper into a level depicting contraction (a reading below zero) than expected, dropping to -17 from February’s 5 reading, versus forecasts to decline to -10.
Treasuries rose as the extreme volatility continued, with the markets grappling with the COVID-19 pandemic uncertainty—and the coinciding spike in unemployment—the passing of the “phase three” fiscal deal and the Fed’s ramped-up stimulus measures. The yield on the 2-year note declined 5 basis points (bps) to 0.29%, the yield on the 10-year note fell 4 bps to 0.83%, and the 30-year bond dropped 3 bps to 1.42%.
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