After two weeks of extreme highs and crushing lows, major U.S. stock indexes were on the upswing heading into the last day of a historically bad quarter.
The week ahead will be anything but smooth. “It’s hardly been a calm market,” said David Rosenberg of Rosenberg Research. “U.S. equity futures have actually been all over the map.”
The Dow, S&P 500 and Nasdaq posted strong finishes Monday, with the blue-chip index jumping 691 points, or 3.2 percent, to close at 22,327.48. The S&P 500 climbed 3.4 percent to end at 2,626.65. The tech-heavy Nasdaq rose 3.6 percent, to 7,774.15.
The Dow got a big boost Monday from Johnson & Johnson. The health care giant’s shares popped more than 8 percent after it announced progress on a coronavirus vaccine. The sector had a big day, with Merck jumping 7.3 percent and Pfizer advancing 5.7 percent. Pfizer is also working on a vaccine to prevent coronavirus.
“The hope is that the combination of fiscal and monetary initiatives will enable the economy to get over the covid-19 recession hump,” said Ivan Feinseth of Tigress Financial Partners. “There was good news from Abbott Labs on a five-minute test and from Johnson & Johnson on a vaccine. Barring any big surprises, the market continues to recover.”
Health care and technology also powered the S&P. Abbott Laboratories shares climbed more than 7 percent Monday following a disclosure over the weekend that the company had approval from the Food and Drug Administration for a coronavirus test capable of generating results within five minutes.
Microsoft soared 7 percent; it is the only Dow component that is positive for the year. Advanced Micro Devices and Micron Technology finished up sharply as well.
Some Wall Street mavens said there is a sense that the United States is finally making strides against the coronavirus.
“There’s movement,” said Daniel P. Wiener, chairman of Adviser Investments, which has $5 billion in assets under management. “I don’t think there’s any new news that would drive stocks higher or lower other than the fact that the U.S. response to the pandemic has begun to kick in.”
Stocks, bonds, gold and oil are coming off a dizzying stretch.
On Friday, Wall Street wrapped up two ferocious weeks of massive stock swings that set marks not seen since the Great Depression, erasing hundreds of billions in wealth. The Dow closed out the week with a 915-point loss, to 21,636, that left it more than 24 percent in the red for 2020 and way off the all-time high set Feb. 12. Multi-trillion-dollar rescue packages from the Federal Reserve and Capitol Hill sparked a robust midweek rally that gave the Dow its second-best three-day run in history.
Even with Friday’s losses, the Dow enjoyed its best week since 1938. The week before had been one of its worst.
The novel coronavirus outbreak sent jobless claims soaring to a record 3.3 million last week as companies large and small began cutting staff as business dried up from closed or curtailed operations. But layoffs are still growing, including among white-collar workers. March numbers are out Friday.
“This is the week in which the rubber meets the road,” said Sam Stovall of CFRA Research. “The March employment report, along with the purchasing managers’ reports, will help formalize the severity of the economic shutdown.”
Oil continues to plummet as public health orders restricting movement have brought travel to a virtual halt. With a lid on consumer demand due to the outbreak, crude traded at an 18-year low at $20 per barrel. CNBC reported barrels of North American oil were selling for less than $5 — which is what oil’s price was in the 1960s.
General Motors, which began producing ventilators in its factories nearly two weeks ago, said last week it would furlough 6,500 workers and temporarily cut their pay by 25 percent. Online jobs marketplace ZipRecruiter let go a third of its staff, close to 500 employees, as job postings dried up.
“Broad slowdown in hiring beyond anyone’s expectations cut into revenue and required cutting costs,” said Julia Pollak, a ZipRecruiter labor economist who is not part of the layoffs. “White-collar layoffs coming in fast and furious now.”
The greatest indicator of the start of market stability, analysts said, is a sign that officials have control over the spread of the virus that’s caused life to screech to a halt. If leaders can “flatten the curve” of new infections — that is, spread them out over time to keep health resources from being overrun — the economy could benefit.
The massive stimulus package plus the Federal Reserve’s unprecedented intervention to backstop lending markets by purchasing unlimited amounts of U.S. Treasurys and mortgage-backed securities are designed to keep the economy from sustaining permanent damage while the virus is brought under control.
“Fed action combined with the [$2.2 trillion] fiscal package will result in a flattening of the recession curve so we now need to carefully monitor the signs of a flattening of the virus curve,” Torsten Slok, chief economist at Deutsche Bank Securities, wrote in an email. “the Fed and the Treasury are in the process of getting the economy under control, and the latest forecasts suggest that in a few weeks the virus will also be under control. The risks to this outlook are implementation risks of the fiscal package and implementation of virus containment strategies.”
European stocks finished in positive territory across the board. Germany’s blue-chip DAX index led the way with a 1.9 percent advance on the day. London’s FTSE barely clawed into the plus column while the Pan-European Stoxx 600 — Europe’s version of the S&P 500 — drove upward 1.28 percent. Hong Kong’s Hang Seng Index beat back bigger losses to finish down 1.3 percent and Japan’s Nikkei cut its losses to 1.6 percent. The tech-heavy Shanghai index was down just shy of 1 percent.