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U.S. stocks soared on Thursday to post their best week of gains since 1974, extending a remarkable rally despite evidence of increasing economic strain due to the coronavirus pandemic.
Stocks rose sharply on Thursday, closing up, what we could call a good week. The United States Federal Reserve released details of its $2.3 trillion loan program designed to combat the economic fallout from the coronavirus pandemic. Such an announcement from the Fed has had a very positive impact on the markets. On Thursday, the Dow Jones climbed 1.22%. The best performer was JPMorgan Chase & Co (NYSE: JPM) whose shares surged 8.97%. The Nasdaq 100 added 0.11%. The biggest gains were seen among airline stocks as United soared 14.5% and American Airlines rallied 10.41%. The S&P 500 jumped 1.5%. And it was the best week for it since 1974. Gap skyrocketed 15.80%. U.S. markets will be closed on April 10 for Good Friday.
“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus.”
The steps outlined by the Fed include bolstering the Small Business Administration’s Paycheck Protection Program (PPP).
“The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
CNBC’s Jim Cramer commented Fed’s move on “Squawk Box” saying:
“This Fed is the most aggressive Fed. They do not want to be known as the reason why we went into a depression. I’m very impressed. The Fed is on its game and this is what is needed because we got to fight off a depression, we got to get America open for business.”
OPEC+: Output Cuts Deal Depends on Mexico
Investors were also focused on the OPEC+ meeting on output cuts amid the coronavirus crisis. According to the latest information, the agreement on the reduction of oil production between the Organization of the Petroleum Exporting Countries (OPEC) and other major oil producers, known as OPEC+, depends on Mexico’s commitment.
The group confirmed provisions from an earlier statement that said production cuts will amount to 10 million barrels per day for two months, starting May 1. After the deal was initially revealed, Mexico voiced concerns over its output cuts.
Difficult to Get Overly Bullish
It seems that the Fed announcement even outweighed another huge rise in weekly jobless claims A total of 6.6 million people in the United States filed for unemployment benefits last week amid the coronavirus pandemic. Together with the previous week, approximately 16 million people filed for unemployment benefits due to the coronavirus shutdown.
This, however, represents a fall of 261,000 from week ago which was revised up by 219,000 to nearly 6.9 million. Wall Street’s weekly incline also came as a result of hopes that the pandemic is slowing down. New York State Governor Andrew Cuomo said yesterday that the number of hospitalizations fell for another day, pointing towards a flattening curve. He, however, warned that if social distancing and other measures in place are ignored, the numbers would go up again.
U.S. Back in Business in May?
United States Treasury Secretary Steven Mnuchin said earlier that the country may be ready “to be back for business in May.”
He also revealed that the aid for airlines will be rolled out soon, stressing that “there will be no bailouts for them, but they have to have liquidity.” He hailed the cooperation between his department and the Federal Reserve and banks. Mnuchin also clarified that today’s Fed measures are “lending facilities and not grants.” He added that he expects that the next of Congressional aid would include more funds for the hospitals.
“I think this is kind of buy the rumor and potentially we sell the news when reality sets in of what we are going to see what’s on the other side. I think people are naturally optimistic right now in terms of the market. I just don’t think they’re really factoring in what we’re going to see on the other side,” explained billionaire investor Mark Cuban.