Friday's Stock Market Close: US Equities Drop, House Passes Coronavirus Relief Bill

U.S. stocks dropped on Friday, snapping a three-day rally that saw the Dow surge more than 20%, as the House passed a coronavirus relief package.

The Dow Jones Industrial Average dropped 915.39 points to 21,636.78, while the S&P 500 fell 88.6 points to 2,541.47 and the Nasdaq Composite Index tumbled 295.16 points to 7,502.38.

For the week the Dow jumped 12.8%.

Volume on the New York Stock Exchange totaled 5.17 billion shares with 650 issues advancing, three setting a new high, and 2,365 declining, with 42 setting new lows.

Active movers were led by Ford Motor (F), General Electric Co. (GE) and Bank of America (BAC).

On Friday, the House passed a $2 trillion coronavirus relief bill and sent the legislation to President Donald Trump who promised to sign it.

Johns Hopkins University said the global number of coronavirus cases now exceed 542,700 with at least 85,996 in the U.S.

U.K. Prime Minister Boris Johnson tested positive for the coronavirus.

Some analysts remained skeptical about both the three-day rally and how effective the stimulus measures will be.

“We believe medium-term risks are skewed to the downside after this rally,” said Maneesh Deshpande, Barclays’ chief U.S. equity strategist. “Two other uncertainties facing investors -- the length of the economic quarantine required to contain the virus and the ultimate economic damage -- remain unresolved. Bear market ‘head-fake’ rallies are not uncommon.

“Even though equities were squeezed higher into the close [on Thursday], credit markets continue to diverge substantially,” said Ken Berman, strategist at Gorilla Trades. “You could almost smell the burning shorts on Wall Street [Thursday], but as credit spreads remain wide, one has to wonder how much ‘real’ buying is behind this week moves, besides the bailout-induced short-covering.”

Gregory Faranello, head of U.S. rates trading at AmeriVet Securities, said: “I wouldn’t necessarily take the price action in the risk markets right now to be a true reflection that this is over. This is going to be an economic fallout. We’re seeing in two weeks what we would normally see maybe in a year and a half or two years.”

In U.S. economic data, personal income increased by 0.6% in February, while disposable personal income rose 0.5% and personal consumption expenditures edged up 0.2%.

The University of Michigan index of consumer sentiment plunged to 89.1 in March — its lowest level since October 2016 — from 101 in February.

Overnight in Asia, markets closed higher. China’s Shanghai Composite inched up 0.26%, while Hong Kong’s Hang Seng edged up 0.56%, and Japan’s Nikkei-225 surged 3.88%.

In Europe markets closed lower, as Britain’s FTSE-100 plunged 5.7%, France’s CAC-40 tumbled 4.54% and Germany’s DAX fell 3.7%.

Crude oil futures dropped 4.42% at $21.60 per barrel, Brent crude slipped 0.11% at $27.92. Gold futures fell 1.72%.

The euro gained 0.87% at $1.131 while the pound sterling gained 2.13% at $1.2464.

The yield on the 10-year Treasury dropped 7.64% to 0.749% while yield on the 30-year Treasury fell 4.16% to 1.337%.