Analysts seemed intent on latching on to any morsel of news signifying the disease is cresting. The Dow spiked 1,627 points, or 7.7 percent, on Monday to close at 22,679.46. The S&P 500 jumped 175 points, or 7.0 percent, to 2,663.68. The tech-heavy Nasdaq bounced 540 points, or 7.3 percent, to finish at 7,913.24.
“Today is very understandable,” said David Bahnsen, chief investment officer of the Bahnsen Group, a private wealth firm based in Newport Beach, Calif., that manages $2.3 billion in assets. “The market is a forward-looking discounting mechanism. And if you worry at the doomsday side of the health models, you get a Dow dropping to 18,000. The better case models have the Dow at 25,000.
“Right now, we are sitting in the middle of those outcomes,” Bahnsen said. “The idea that three weeks or three months from now we will be in a worst-case scenario in the health crisis is dissipating. There isn’t a single data point that says otherwise. We are talking about medical supplies, hospital capacity, numbers of diagnoses, numbers of deaths. Spain is bending their curve. California’s numbers are not moving. The market is anticipating that social distancing works.”
Stocks were cruising along on decent gains Monday when New York Gov. Andrew M. Cuomo went on television for his daily news update around noon. Cuomo said the spread of the virus in his state may be topping out, and the state reported its first daily decline in coronavirus deaths Monday.
The markets never looked back. All 11 S&P sectors stormed higher, with technology stocks surging 9 percent to lead everyone. Every one of the 30 Dow components advanced. Boeing jumped nearly 20 percent and American Express climbed 14 percent to lead the Dow.
The hard hit retail sector went wild on a bet that people will have paychecks and return to stores. Kohl’s jumped 23 percent, Nordstrom popped 24 percent and Ross Stores climbed 16 percent. Hotels surged as investors entertained a resumption of travel. MGM Resorts, Marriott and Hilton saw respective bounces of 22, 19 and 14 percent.
“Today shows that there are buyers out there who think we will recover,” said Howard Silverblatt of S&P Dow Jones Indices. “Not everyone thinks we will recover at the same time, which means more volatility ahead.”
Jeffrey Kleintop, chief global investment strategist at Charles Schwab, said the available data shows that the U.S. will eventually return to normal.
“Investors have a choice,” he said. “Do they want to focus on the economic free fall in the U.S. and Europe, or do they want to focus on the recovery that’s underway in Asia?”
South Korea is recording encouragingly low numbers of new cases, and China’s powerful economy is coming back online.
Monday’s surge marked a significant turnaround from Friday, when Wall Street stumbled out of another volatile week. The three major U.S. indexes shed at least 1.5 percent on the day — after the Labor Department announced 701,000 jobs were lost in March, driving the jobless rate up to 4.4 percent — and have lost more than a quarter of their value since hitting all-time highs in February. It was the third week out of four that the indexes ended in the red.
“The market is entirely focusing on a relief rally based on the near-term event, which is the health crisis,” said Wayne Wicker, chief investment officer at Vantagepoint Investment Advisers. “I don’t think it’s really focused that much on some of the challenges ahead for getting the economy back on track.”
But entire industries have been disrupted by stay-at-home orders, which have been implemented in more than 40 states. Nearly 10 million people filed jobless claims the last two weeks of March.
“Monday makes no sense to me,” said Michael Farr of Farr, Miller & Washington. “We are paying attention to disease news and are not looking past it to economic data. Nobody has gotten hired in the past week. Estimates are as high as 50 million unemployed. Those 50 million aren’t going to have paychecks to spend.”
Businesses and households are now waiting for waves of government stimulus, which already has equaled 10 percent of U.S. gross domestic product, to flow in. Many small-business owners are reporting major delays in securing loans, without which many will close their doors. The Internal Revenue Service has warned the $1,200 relief checks may not reach many Americans until August or September if they haven’t already provided direct-deposit information to the government.
Japan’s Nikkei 225 climbed more than 4.2 percent even with the nation expected to announce a state of emergency due to the virus and Hong Kong’s Hang Seng closing up 2.2 percent. European markets were up across the board, with the benchmark Stoxx 600 index up nearly 4 percent. Britain’s FTSE 100 rose more than 3 percent.
Oil fell as investors looked toward an emergency summit to address the ballooning global oil supply, another consequence of the pandemic. Brent crude, the global oil benchmark, declined more than 2.3 percent to trade at $33.30 a barrel. Tensions between Russia and Saudi Arabia have strained discussions about production cuts as demand weakens.
Ten-year U.S. Treasury yields rose slightly in early trading to .05, suggesting investor confidence is on the rise. Yields rise when prices drop, as investors move toward riskier ground. But gold, another safe-haven, was also trading up nearly 4 percent at 1,707.70 an ounce.
The full scope of the economy’s losses will be clearer after the upcoming wave of first-quarter earnings reports. Sixty-four percent of the S&P 500′s sectors are projected be in the red, according to commentary from Sam Stovall of CFRA Research, while airlines, copper, department stores and leisure products are projected to post greater than 100 percent declines in earnings per share.
“Investors are advised to fasten their safety belts,” Stovall wrote, “because it’s likely to be a bumpy quarter.”