Thursday's Stock Market Close: US Equities Rally On Likely Passing Of Massive Stimulus Package

U.S. stocks surged on Thursday, despite a staggering 3.28 million people filing for initial jobless claims last week. However, traders were relieved that a $2 trillion stimulus package – which the Senate passed Wednesday evening – is set to pass in the House “with strong bipartisan support,” according to Speaker Nancy Pelosi.

The Dow Jones Industrial Average gained 1,351.62 points to 22,552.17, while the S&P 500 advanced 154.51 points to 2,630.07 and the Nasdaq Composite Index rose 413.24 points to 7,797.54.

Since Monday's close, the Dow has soared 21.3%.

Active movers were led by Ford Motor (F), General Electric Co. (GE) and Carnival Corp. (CCL).

“We all know the pain being felt and the economic damage being caused by this damn virus but because we are so close to getting past the worst of the spread, we need to start getting creative about what the restart will look like,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group.

“The policymakers deserve a lot of credit,” said Ed Perks, chief investment officer at Franklin Templeton Multi-Asset Solutions. “They’ve tackled some of the real critical systemic issues around the financial system continuing to be able to function while we deal with this crisis.”

“I do think the stock market’s going to find a bottom once we get a peak in the epidemic curve, [there’s] not a doubt in my mind the stock market will rally,” said investor Paul Tudor Jones on Thursday.

The number of Americans who filed unemployment claims last week surged to an all-time record of 3.28 million, shattering the previous record of 695,000 in October 1982.

The latest figure largely reflects the shutdown of tens of thousands of businesses due to fears of coronavirus infections.

California Gov. Gavin Newsom said on Wednesday that 1 million people had already filed unemployment claims in his state alone since Mar. 13.

“You have 15.8 million people working in leisure and hospitality, and you just shut down the industry,” said Jon Hill, fixed income strategist at BMO.

“This shouldn’t be an economic figure that sends the stock market plummeting. Most economists have already written off the second quarter as ‘Great Depression’ style economic growth,” said Chris Rupkey, chief financial economist at MUFG Union Bank, prior to the release of the data. “Whether the job losses go to 3 million unemployment claims this week, 4, 5 or 6 million in coming weeks, it’s pretty much besides the point there. Probably the most immediate figure that matter is the daily count of coronavirus cases. That’s probably more important.”

On Wednesday night, the U.S. Senate unanimously passed a $2 trillion coronavirus relief bill -- the biggest rescue package in American history. The package includes, among other items, direct payments to individuals, upgraded unemployment insurance, loans and grants to businesses and increased health care resources for hospitals, states and city governments. The bill now must be approved by the House which is scheduled to vote on Friday.

“With the passage of these fiscal support bills, the attention is going to shift back to two things. Is it working to prevent large scale layoffs? And are the quarantine efforts working?” said Michael Gapen, Barclays chief U.S. economist. “If there are layoffs, but it doesn’t look draconian, if it looks in two to three weeks time, most of the hot spots are under control, then it’s a better outlook. Then it’s a significant but transitory event for activity.”

“Investors need to remain vigilant about how the growth rate of new cases develops and how governments respond going forward,” said Oliver Blackbourn, a multi-asset portfolio manager at Janus Henderson Investors. “The support package should help to assuage the fears about the worst possible economic outcomes for individuals and companies.”

The European Central Bank removed a cap on how many bonds it can purchase from any single euro zone nation as part of its 750 billion euro ($818 billion) bond purchase product designed to limit the economic damage from the coronavirus epidemic.

“In a nutshell, the decision removes virtually all constraints on asset purchases, in a further boost to the credibility of the ECB’s commitment,” said Pictet Wealth Management Strategist Frederik Ducrozet.

Overnight in Asia, markets fell. China’s Shanghai Composite edged down 0.6%, while Hong Kong’s Hang Seng slipped 0.74%, and Japan’s Nikkei-225 plunged 4.51%.

In Europe markets turned higher, following U.S. equities, as Britain’s FTSE-100 rose 1.05%, France’s CAC-40 climbed 0.96% and Germany’s DAX gained 0.44%.

Crude oil futures dropped 4.94% at $23.28 per barrel, Brent crude gained 1.71% at $29.14. Gold futures gained 0.62%.

The euro rose 1.54% at $1.052 while the pound sterling gained 2.75% at $1.2207.

The yield on the 10-year Treasury dropped 5.48% to 0.811% while yield on the 30-year Treasury fell 1.97% to 1.395%.