Stocks Finish Higher in Another Wild Session…..

U.S. equities finished higher in another choppy session, getting a boost from a rally in the energy sector amid a surge in crude oil prices off a near two-decade low. The jump in oil came in the wake of comments from President Donald Trump that he believes Russia and Saudi Arabia could end their price war soon by announcing production cuts. However, the continued skittishness toward the intensifying uncertainty regarding the depth and duration of the COVID-19 pandemic kept the gains in check. In economic news, weekly initial jobless claims in the U.S. surged for a second week, the trade balance narrowed more than expected and factory orders were flat. Meanwhile, in news on the equity front, Dow member Walgreens Boots Alliance topped quarterly expectations and was the latest company to hold off on providing guidance, American Airlines said it has drawn down most of its credit line, Dow component Boeing is reportedly planning to offer early retirement or buyouts for some employees, and China-based Luckin Coffee tumbled over 75% after reporting that it is investigating a senior executive and employees for potential fabricated transactions. Treasury yields were lower, as bond prices moved modestly to the upside, while the U.S. dollar and gold gained ground. Europe finished higher amid the rally in energy issues, but Asian markets were mixed.

The Dow Jones Industrial Average rose 470 points (2.2%) to 21,413, the S&P 500 Index gained 56 points (2.3%) to 2,527 and the Nasdaq Composite advanced 127 points (1.7%) to 7,487. In moderately heavy volume 1.3 billion shares were traded on the NYSE and 3.6 billion shares changed hands on the NASDAQ. WTI crude oil jumped $5.01 to $25.32 per barrel and wholesale gasoline was up $0.11 at $0.66 per gallon. Elsewhere, the Bloomberg gold spot price increased $23.36 to $1,614.87 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.5% higher at 100.16.

The unprecedented uncertainty surrounding the depth and duration of the COVID-19 (coronavirus) pandemic’s economic and social disruption remains the key driver of volatility in the markets. The more than $2.0 trillion in fiscal aid from U.S. lawmakers—with expectations high that more may be in the offing—and multiple monetary policy bazooka blasts from the Federal Reserve of trillions of dollars in liquidity to try to keep the credit markets functioning properly have been cheered by the markets. Part of the fiscal aid is aimed at combating the surge in unemployment for small businesses—a large portion of the U.S. employment—through forgivable loans or grants to those that rehire or hold off on layoffs. Demand for these loans that begin tomorrow is expected to be extremely high, causing concerns that funds for these loans may dry up quickly. However, Treasury Secretary Steven Mnuchin pledged yesterday that if the loan program eats through the earmarked funds of the aid package, he will not hesitate to move quickly to ask Congress for more funding.

Weekly initial jobless claims spiked by 3,341,000 to 6,648,000 for the week ended March 28th, above the Bloomberg estimate of 3,763,000, and compared to the prior week’s upwardly-revised 3,307,000 level. The four-week moving average jumped by 1,607,750 to 2,612,000, while continuing claims rose by 1,245,000 to 3,029,000, south of estimates of 4,941,000. The dramatic rise in unemployment claims over the past two weeks has been anticipated, given the unfolding COVID-19 crisis, but the $2.2 trillion fiscal aid package—and potentially more support—is aimed at stemming the flood of unemployment.

The trade balance showed that the February deficit narrowed more than expected, coming in at $39.9 billion versus estimates of $40.0 billion. January’s deficit was revised to a shortfall of $45.5 billion from the originally-reported $45.3 billion.

Factory orders came in flat month-over-month (m/m) in February, versus expectations of a 0.2% gain, and compared to January’s unrevised 0.5% decline. Stripping out the volatile transportation component, orders declined 0.9%, compared to January’s downwardly-adjusted 0.4% decrease. Final durable goods orders, preliminarily reported last week, were unrevised at a 1.2% m/m rise for February, and orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, were adjusted lower to a 0.9% decrease.

Treasuries were higher, as the markets continued to grapple with the festering COVID-19 pandemic uncertainty and the coinciding spike in jobless claims, along with the massive amounts of fiscal and monetary policy responses. The yields on the 2-year and 10-year notes declined 1 basis point (bp) to 0.21% and 0.61%, respectively, while the 30-year bond rate was down 2 bps to 1.26%.

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