In this image taken from video provided by the New York Stock Exchange, Tommy Gannon, Assistant Supervisor, Facilities, rings the opening bell at the NYSE, and recognizes the Sodexo food services staff at Beth Israel Deaconess Medical Center in Boston, Tuesday, April 7, 2020, in New York. (New York Stock Exchange via AP)
By Stan Choe
Stocks are climbing on Wall Street Tuesday as markets around the world pile on even more gains following their huge rally a day earlier.
The S&P 500 was up 2.6% in early afternoon trading, tacking onto its 7% surge Monday following encouraging signs that the coronavirus pandemic may be close to leveling off in some of the hardest hit areas of the world.
Even though economists say a punishing recession is inevitable, the stock market is looking ahead to when economies will reopen from their medically induced coma. A peak in new infections would offer some clarity about about how long the recession may last and how deep it will be. Investors could then, finally, envision the other side of the economic shutdown, after authorities forced businesses to halt in hopes of slowing the spread of the virus. In the meantime, governments around the world are approving or discussing trillions of dollars more of aid for the economy.
Many professional investors say they’re wary of the recent upsurge and expect more volatility ahead. But if Tuesday’s rally holds, it would be one of the few times the market has mustered a back-to-back gain since the coronavirus outbreak caused it to start selling off in mid-February.
The 2.6% gain for the S&P 500, as of 1:14 p.m. Eastern time, was close to the midpoint of its gains during the morning. It's up a little more than 20% since hitting a recent low on March 23. Some investors call any rise of 20% or better a new “bull market,” while others say the gains need to hold for six months to confirm it.
“We are still in what you would call the relief rally off of the prior low,” said Sam Stovall, chief investment strategist at CFRA. He noted that this kind of a rally is common within deep bear markets, Wall Street-speak for when stocks decline 20% or more from a peak.
“There’s no guarantee that the worst is behind us, yet traders believe that at least there is some short-term money to be made,” Stovall said.
The Dow Jones Industrial Average was up 695 points, or 3.1%, to 23,369, and the Nasdaq was up 2.1%.
Leading the market were stocks that have been among the most heavily beaten down since the sell-off began. Travel companies, retailers and energy companies all jumped as investors envisioned people driving to their jobs again, flying to meetings and shopping in stores instead of just online.
Kohl's surged 25%, American Airlines Group jumped 17.3% and Diamondback Energy rose 10.3%, but all three remain down more than 60% for 2020 so far.
In China, the first country to lock down wide swaths of its economy to slow the spread of the virus, authorities reported no new deaths over the past 24 hours. Many experts, though, are skeptical of China’s virus figures.
Investors also see signals that the number of daily infections and deaths may be close to peaking or plateauing in Spain, Italy and New York. The number of daily deaths rose in New York, the center of the U.S. outbreak, but other statistics were more encouraging, including the average number of people hospitalized each day.
Experts say more deaths are on the way due to COVID-19, which has already claimed at least 76,000 lives around the world. The U.S. leads the world in confirmed cases with more than 369,000, according to a tally by Johns Hopkins University.
More economic misery is also on the horizon. Economists expect a report on Thursday to show that 5 million Americans applied for unemployment benefits last week as layoffs sweep the country. That would bring the total to nearly 15 million over the past three weeks. Analysts also expect big companies in upcoming weeks to report their worst quarter of profit declines in more than a decade.
But investors have already been preparing for a sharp, sudden recession. That’s why they sent the S&P 500 down as much as 34% since its mid-February peak. It's still down about 20% since then.
Massive aid from the Federal Reserve has helped smooth out snarled trading that had beset lending markets earlier in the sell-off. Companies are coming back to the bond market to borrow, even some with “junk” credit ratings, and investors are actually lending them money again.
Japan’s government on Tuesday formally announced a 108 trillion yen ($1 trillion) package for the world’s third-largest economy.
In the U.S., the world’s largest economy, House Speaker Nancy Pelosi is telling her colleagues that another $1 trillion is needed for the next coronavirus rescue package. Last month, Congress approved a $2.2 trillion package.
Senate Majority Leader Mitch McConnell said that he's pushing for the Senate to vote as early as Thursday to give additional funding to a small-business program that's part of the rescue package.
In Europe, Germany's DAX jumped 2.8%, and France's CAC 40 rose 2.1%. The FTSE 100 in London added 2.2%.
In Asia, Japan's Nikkei 225 rose 2%, South Korea's Kospi gained 1.8% and the Hang Seng in Hong Kong was up 2.1%.
In a signal that investors are feeling less pessimistic about the economy and inflation, they pushed the yield of the 10-year Treasury up to 0.77% from 0.67% late Monday.
That's still painfully low relative to history. The yield was above 1.90% earlier this year and had never been below 1% until last month. Nonetheless, it's been climbing since it hit a record low of 0.498% in early March, according to Tradeweb.
Despite yields remaining near all-time lows, there is an encouraging sign in bond markets: longer-term Treasury yields are still higher than short-term ones. That's a reversal from the “inverted yield curve” of earlier this year, a warning sign for investors that occurs when short-term yields are higher than long-term ones.
Ukrainian President Volodymyr Zelenskyy has signed an application for Ukraine's membership in the European Union, pleading with the bloc to accept this request. It comes as Russian forces push further into Ukraine, forcing at least half a million refugees to flee. Benjamin Schmitt, Postdoctoral Research Fellow at Harvard University and Senior Fellow at the Center for European Policy Analysis, breaks down the latest in Ukraine.
A growing wave of major U.S. companies have taken steps to cut ties with Russia or offer support to Ukraine, as tensions escalate in the region. Exxon, Apple and Boeing are just the latest companies to make the move, following the likes of Google, Meta and BP who have all announced plans to exit the region in response to the conflict. Courtney Vinopal, Breaking News Reporter, Quartz joined Cheddar's Opening Bell for more.
Uber is rolling out a new feature on its app called Explore that will allow users to discover things to do in their area such as dining. The new service is now available in 14 U.S. cities.
Traci Gusher, EY Americas data and analytics leader, joins Cheddar News to discuss how companies have made strides within data and analytics throughout the pandemic and what the chief information officers of today need to focus on and dedicate resources to.
Wall Street took another sharp swing Wednesday, this time back to rally mode, as stocks and Treasury yields rose even as U.S. crude oil prices climbed to the highest level in more than a decade.
The S&P 500 rose 1.9%, recouping its losses from earlier in the week, after Federal Reserve Chair Jerome Powell said he supports a more modest rise in interest rates this month than some investors had feared. He also said he still expects inflation, which is at its highest level in 40 years, to moderate through the year.
“Although we’ve had some Fed governors lately saying ‘Oh my God, this is such a huge crisis,’ the conventional wisdom is slow and steady wins the race right now,” said J.J. Kinahan, chief strategist with TD Ameritrade.
The comments helped drive the market higher, adding to modest gains from earlier in the morning. Other areas of the market also gained ground a day after worries about Russia’s invasion of Ukraine sent the S&P 500 tumbling 1.5% and prices soaring for all kinds of commodities.
Treasury yields jumped to recover some of their steep losses from the past week. Gold receded, and a measure of nervousness among stock investors on Wall Street eased after swinging sharply in recent days.
“We’ve seen wild swings, but not major changes in the indexes,” said Jeff Kleintop, chief global investment strategist at Charles Schwab. “Geopolitical conflicts can be very unsettling, but you don’t tend to get bear markets from these, just periods of volatility.”
Markets have been spinning wildly as investors try, sometimes blindly, to gauge how high Russia's attack on Ukraine will push prices for oil, wheat and other commodities where the region is a major producer. On top of that are worries about what upcoming hikes in interest rates by the Federal Reserve and other central banks around the world will do to the economy and inflation.
Powell said in testimony to Congress that the Fed is set to raise its key interest rate for the first time since 2018. But he also said the attack on Ukraine may have muddied conditions, with its impact on the U.S. economy “highly uncertain,” adding that “we're never on autopilot.”
The Fed is balancing a tightrope where it needs to raise interest rates enough to rein in the highest inflation in generations but not so much that it pushes the economy into a recession. All the while, higher interest rates tend to put downward pressure on stocks and most other investments.
The yield on the 10-year Treasury leaped to 1.89% from 1.72% late Tuesday, while the two-year Treasury surged to 1.53% from 1.31%. Yields, though, remain well below where they were before Russia’s invasion. The 10-year yield was above 2% last month, before it plunged as investors plowed into investments seen as safer amid worries about war.
The price of U.S. oil jumped another 7% to $110.60 per barrel, the highest level in just over a decade. Brent crude, the international standard, climbed 7.6% to $112.93 per barrel.
Leaders of OPEC and other major oil-producing countries decided Wednesday to stick with their plan to gradually increase oil production. The OPEC+ coalition of oil producers, made up of OPEC members led by Saudi Arabia and non-cartel members led by Russia, chose to increase oil production by 400,000 barrels per day in April.
The move follows a perhaps less impactful decision by the United States and other major governments in the International Energy Agency to release 60 million barrels from strategic reserves to boost supplies.
“Markets dismissed the notion that 60 million barrels of strategic reserves released will be consequential to the risks of Russian supply jeopardized,” Tan Boon Heng of Mizuho Bank said in a report. “Russia pumps more than that in just six days.”
In the stock market, all the uncertainty about oil prices and inflation has led to big swings not only by the day but also by the hour. The S&P 500 swung between gains of 0.4% and 2.2% Wednesday. It closed 80.28 points higher to 4,386.54.
The Dow Jones Industrial Average rose 596.40 points, or 1.8%, to 33,891.35, while the Nasdaq composite gained 219.56 points, or 1.6%, to 13,752.02.
More than 90% of stocks in the S&P 500 rose, with technology, financial and health care companies accounting for a big share of the rally. Bank stocks led the gainers, climbing 2.6%, as higher longer-term interest rates can mean bigger profits for them making loans. Energy stocks also helped lift the index as they rode higher energy prices.
Ross Stores climbed 6.1% after the retail chain reported stronger profit for its last quarter than analysts expected.
Ford jumped 8.4% after it said it was accelerating its transformation into an electric-vehicle company and split its EV and internal combustion operations into two individual businesses.
Stock markets around the world were mixed. France’s CAC 40 rose 1.6%, Germany’s DAX returned 0.7% and Japan’s Nikkei 225 fell 1.7%.
Russia’s central bank said stock trading on the Moscow exchange would remain closed Wednesday for a third day, though trading of currencies and precious metals would resume for the first time this week.
Late Tuesday, President Joe Biden announced he was joining U.S. allies in closing the country’s air space to Russian aircraft, the latest in a set of sanctions and other measures meant to isolate Russia.
But Biden also said in his annual State of the Union speech that he would try to cushion Americans against the impact of higher oil prices. “I will use every tool at our disposal to protect American businesses and consumers,” Biden said.
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