Markets End Historically Volatile Week On Uneven Note

The S&P 500 came roaring back after hitting multi-year lows on optimism that a $2 trillion government stimulus package can get America through the worst of the coronavirus (COVID-19) outbreak.

The Dow Jones Industrial Average gained nearly 20% over a three-day stretch from Tuesday through Thursday. The three-day rally included the Dow’s best single-day percentage gain since 1933 on Tuesday despite the Labor Department reporting a record 3.28 million weekly unemployment benefit claims.

The Dow opened Monday morning at 19,028 and closed Friday afternoon at 21,636.78

Government Steps Up

Much of the market’s optimism stemmed from Congress passing a $2 trillion stimulus package. The legislation includes direct payments of $1,200 for Americans earnings less than $75,000, $250 million in unemployment insurance, $350 billion in funding for small business loans and $500 billion in loans for distressed companies.

President Donald Trump also struck an optimistic tone about the U.S. economy in a town hall event hosted by Fox News on Tuesday.

“I would love to have the country opened up and rarin’ to go by Easter,” Trump said.

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Former Federal Reserve Chairman Ben Bernanke, who oversaw the Fed during the financial crisis in 2008, said Chairman Jerome Powell is making the right move in taking an extremely aggressive monetary policy approach to the current situation.

“If there’s not too much damage done to the workforce, to the businesses during the shutdown period, however long that may be, then we could see a fairly quick rebound,” Bernanke said in an interview with CNBC.

“I think this rally is good,” said Shawn Cruz, manager of trader strategy at TD Ameritrade. “What I would like to see is just a dampening down of volatility. We don’t want to shoot up 20%. Let’s go from being up or down 8% in a day and let’s make these moves smaller.

"That can be what allows us to build a base, and once you see that happen people will start to get a sense that the worst of the selling is over.”

Earnings In Focus

Nike Inc NKE shares gained more than 20% after the company reported fiscal third-quarter earnings and revenue ahead of analyst expectations and said it's seeing a “recovery” in its China business following the COVID-19 outbreak.

Twenty-four S&P 500 companies have already either cut or withdrawn their first-quarter earnings guidance since their fourth-quarter earnings reports due to the negative impact of COVID-19, according to FactSet.

Economic Numbers

Following record jobless claims, investors will be watching the Labor Department’s initial jobless claims report for the week ending March 27 due out next Thursday and the Bureau of Labor Statistics’ nonfarm payrolls report for the month of March due out on Friday.

“From an economic standpoint, it shows why we care about those numbers so much," Cruz said. “Because it lets us know people’s ability to go out there and spend and drive the economy. When you’re looking at a pool of 16 million workers [in hospitality] who don’t have a job to go into, 3 million may just be the tip of the iceberg.”