In this Jan. 3, 2020 file photo, the Wall St. street sign is framed by U.S. flags flying outside the New York Stock Exchange in New York. Global stocks are down, Friday, April 3, after the U.S. government said employers cut 701,000 jobs in March as they shut down or sharply curtailed business due to the coronavirus outbreak. (AP Photo/Mary Altaffer, File)
By Stan Choe
Stocks jumped in early trading on Wall Street Thursday after the Federal Reserve launched its latest unprecedented effort to support the economy through the coronavirus outbreak.
The central bank undertook actions to provide up to $2.3 trillion in loans to households, local governments and small and large businesses as the country tips into what economists say may be the worst recession in decades. It’s the latest massive move by the Fed, which has been rushing to ensure cash can get to parts of the economy that need it after lending markets got snarled earlier by a rush among investors to pull cash out of the system.
The stock market is not the economy, and that distinction has become even more clear this week. The S&P 500 jumped 1.9% in early trading Thursday, the same day the government announced 6.6 million Americans applied for unemployment benefits last week as layoffs sweep the nation.
That’s because stock investors are continuously looking ahead a few months to the future. They sent stocks down by a third from mid-February into late March, before the economy really began to crunch.
And in recent weeks, they’ve sent the market back up more than 20% following the massive aid promised by the Fed, other central banks and governments around the world, even as evidence piles up that the fears of a recession were prescient. This week, some investors have also begun to look ahead to the possibility that parts of the economy could reopen amid signs the outbreak may be peaking or plateauing in several of the world’s hardest-hit areas.
The Dow Jones Industrial Average rose 455 points, or 1.9%, to 23,879, as of 9:50 a.m. Eastern time. The Nasdaq was up 1.5%.
The S&P 500 is on track for a gain of more than 12% for the holiday-shortened week. That would be its best performance since 1974. U.S. stock markets are closed on Friday for the Good Friday holiday.
Walmart, which became the nation’s largest retailer by making low prices a priority, has found itself in a place it’s rarely been: Warning customers that prices will rise for goods ranging from bananas to car seats.
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American businesses that rely on Chinese goods are reacting with muted relief after the U.S. and China agreed to pause their exorbitant tariffs on each other’s products for 90 days. Many companies delayed or canceled orders after President Donald Trump last month put a 145% tariff on items made in China. Importers still face relatively high tariffs, however, as well as uncertainty over what will happen in the coming weeks and months. The temporary truce was announced as retailers and their suppliers are looking to finalize their plans and orders for the holiday shopping season. They’re concerned a mad scramble to get goods onto ships will lead to bottlenecks and increased shipping costs.
Shopping expert Trae Bodge discusses how talks between the U.S. and China is good news for now, but uncertainty remains for back-to-school and the holidays.
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