FED-RATES

Jerome Powell, chairman of the Federal Reserve, shown here speaking during a Senate Banking Committee hearing in Washington on Feb. 12, said this week that the Fed still has a lot of ammunition to help the economy.

MUST CREDIT: Bloomberg photo by Andrew Harrer.

U.S. stocks rallied again as investors speculated that the $2 trillion rescue package poised to pass Congress will blunt the coronavirus pandemic’s toll on the economy. Treasuries held gains and the dollar fell.

The S&P 500 closed near session highs, posting its first three-day rally since February. The Dow Jones Industrial Average saw its biggest three-day gain since 1931 — and is now 21% above its March 23 trough — buoyed by another big advance in Boeing Co.

Jobless claims surged to a record 3.28 million Americans last week as businesses shut down to help prevent the spread of the virus. While the reading exceeded estimates, aid from the U.S. government my help offset the damage to workers and businesses. Federal Reserve Chairman Jerome Powell also sought to assure the public that the central bank wouldn’t run out of crisis-fighting ammunition.

“Now that the stimulus bill is moving through, that’s a countervailing force to the rising jobless claims,” said Brian Nick, chief investment strategist at Nuveen. “Hopefully, if all works as intended, businesses should be able to get loans relatively quickly, cease their layoffs and potentially — if they want to get the full benefits of the loans — bring people back that they already laid off.”

The jobless number is one of the first major data points to show the extent of the impact on the American economy since states around the country began widespread business shutdowns aimed at preventing the coronavirus from spreading.

European stocks moved higher, and sovereign debt rose after the region’s central bank announced it will scrap limits on bond purchases for its emergency program, a landmark decision that gives it almost unlimited power to fight the economic fallout from the virus. The euro strengthened while a gauge of the dollar headed for a third down day.

While rescue measures across major economies are unprecedented, traders remain cognizant of the virus’s escalating toll.

The world’s cases now top 451,000, with more than 20,000 deaths. The U.S. death toll has topped 1,000.

“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.”

Elsewhere, crude declined after three days of gains. The head of the International Energy Agency said global oil demand is in free fall because of the pandemic, made worse by the price war between Saudi Arabia and Russia. Emerging-market shares and currencies climbed.

These are the main moves in markets:

Stocks:

  • The S&P 500 Index rose 6.1% as of 4 p.m. New York time.
  • The Stoxx Europe 600 Index rose 2.6%.
  • The MSCI Asia Pacific Index advanced 0.9%.

Currencies:

  • The Bloomberg Dollar Spot Index decreased 1.9%.
  • The euro advanced 1.6% to $1.1055.
  • The British pound increased 2.9% to $1.2224.
  • The Japanese yen advanced 1.6% to 109.42 per dollar.

Bonds:

  • The yield on 10-year Treasuries dipped five basis points to 0.82%.
  • Germany’s 10-year yield decreased 10 basis points to -0.36%.
  • Britain’s 10-year yield fell five basis points to 0.4%.

Commodities:

  • Gold rose 1% to $1,632.66 an ounce.
  • WTI crude decreased 5.1% to $23.23 a barrel.

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