Stocks Surge on Upbeat COVID-19 Developments……
U.S. equities began the week on a solid high note amid some welcome optimism that the coronavirus curve could be flattening, with death tolls in Italy and Spain appearing to slow and the intensity of the outbreak in the current epicenter of New York showing early signs of softening. However, the uncertainty surrounding the depth and duration of the economic and social disruption of the pandemic remained, and the implementation of the $2.2 trillion aid package got off on some shaky footing. Crude oil prices were lower as the scheduled meeting between OPEC and its allies was delayed, but hopes remain high that Saudi Arabia and Russia may be able to strike a deal to end their price war. Treasuries lost ground, with yields rising, amid a dormant economic calendar, while gold and the U.S. dollar were higher. News on the equity front remained sparse, as it continues to take a back seat to the severe coronavirus disruption. Markets is Europe and Asia also saw widespread gains.
The Dow Jones Industrial Average soared 1,627 points (7.7%) to 22,680, the S&P 500 Index advanced 175 points (7.0%) to 2,664 and the Nasdaq Composite jumped 540 points (7.3%) to 7,913. In moderately heavy volume, 1.4 billion shares were traded on the NYSE and 3.8 billion shares changed hands on the NASDAQ. WTI crude oil fell $2.26 to $26.08 per barrel and wholesale gasoline was up $0.01 at $0.70 per gallon. Elsewhere, the Bloomberg gold spot price was $42.35 higher at $1,663.16 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.2% to 100.79.
U.S. stocks recovered sharply from last week’s drop, which was the third weekly decline in four, amid a noticeable rise in the global equity markets as signs of slowing in new cases and deaths of COVID-19 (coronavirus) in key regions of Europe, such as Italy and Spain, appear to be fostering the rebound. Moreover, New York Governor Andrew Cuomo noted that the State, which is currently the epicenter of the outbreak in the world’s largest economy, may be reaching a “plateau” seemed to also paint a somewhat optimistic tone regarding the ability of economic and social activity getting on the path to relative normalcy.
However, volatility is likely to remain elevated as the markets grapple with the lingering uncertainty pertaining to the timing of a flattening of the U.S. coronavirus curve and the depth and duration of the pandemic’s disruption, which continues to stymie economic forecasting and has seen unemployment spike. Projections are calling for a severe drop in economic output and the lack of clarity of when the economy will re-open will likely continue to hamstring conviction, exacerbated by expectations that the U.S. is set for extreme turbulence as it approaches the eye of the storm. Also, some bumps in the road regarding the implementation of the massive $2.2 trillion fiscal aid package aimed at helping small businesses, households and severely impacted industries weather the storm are complicating the matter, along with focus on the healthcare system, which continues to be tested as the virus spreads across the nation. A delayed meeting between OPEC and its allies, known as OPEC+, is weighing on crude oil prices but optimism remains that Saudi Arabia and Russia can agree on production cuts.
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