Investors Cheer Historic Stimulus Bill

Hi Everyone,

The stock market finished significantly higher, with the Dow and the S&P 500 rising for the third day in a row thanks to the huge and well-targeted stimulus package that got unanimous support in the Senate. The Dow was up 1,352 or 6.4%, to 22,552, the Nasdaq gained 413, or 5.6%, to 7,798, while the S&P 500 rose by 155, or 6.2%, to 2,630. Advancing issues outnumbered decliners by a 4-to-1 ratio on the NYSE, where volume remained relatively heavy.

Traders said that even though equities were squeezed higher into the close, credit markets continue to diverge substantially, despite the flood of liquidity provided by central banks. As one trader explained, “You could almost smell the burning shorts on Wall Street today, but as credit spreads remain wide, one has to wonder how much ‘real’ buying is behind this week’s move, besides the bailout-induced short-covering.”

U.S. Treasury yields were little changed, despite the risk rally, which is yet another confirmation that the rally in stocks is mostly fueled by short-covering. That said, the monster stimulus package could drive yields higher going forward, but for now, Treasuries remain the most important global safe-haven. The worrisome U.S. COVID-19 numbers were not enough to hurt bullish investor sentiment. The slowing European improvement warns of a possibly longer lockdown period, despite the Trump Administration’s plan to “re-open America” by Easter.

Today’s new jobless claims release was nothing short of disastrous, as even though analysts expected a number north of 1.5 million, the actual figure of 3.238 million surpassed even the most bearish forecast. The number of claims soared across sectors, and although the stimulus bill puts an emphasis on saving jobs, the size of the spike in unemployment will ultimately come down to the length of the lockdowns and the pandemic’s long-term impact. What seems sure, is that temporary and gig workers will take the biggest initial hit, but those areas will also be the quickest to recover as the situation improves.

As always, have a great evening, stay calm, stay home, stay healthy, do your part to flatten the curve and stay tuned!!!

Joe

Skills

Posted on

March 27, 2020

Submit a Comment

Your email address will not be published. Required fields are marked *

Wordpress Popup Plugin Free