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U.S. Stocks Seeing Further Upside After Early Rally

wallstreet1 061518 26mar20 lt

After moving sharply higher early in the session, stocks have seen some further upside over the course of the trading day on Thursday. The Dow and the S&P 500 are moving higher for the third straight day, climbing further off Monday's three-year lows.

Currently, the major averages are hovering near their best levels of the day. The Dow is up 1,205.61 points or 5.7 percent at 22,406.16, the Nasdaq is up 299.04 points or 4.1 percent at 7,683.34 and the S&P 500 is up 122.03 points or 4.9 percent at 2,597.59.

The rally on Wall Street comes even though the Labor Department released a report before the start of trading showing first-time claims for unemployment benefits soared last week, as large swaths of the U.S. economy were shut down due to the coronavirus pandemic.

The Labor Department said initial jobless claims skyrocketed to 3,283,000, an increase of 3,001,000 from the previous week's revised level of 282,000.

Economists had expected jobless claims to spike to about 1.5 million from the 281,000 originally reported for the previous week.

While the increase in unemployment claims is staggering, economists noted the data may still underestimate the number of new claims due to constraints on the capacity of offices to process claims.

However, traders seem to believe the news was already priced into the markets with the sell-off seen over the past several weeks.

Any negative sentiment also seems to have been offset by last night's news that the Senate finally voted to approve a massive $2 trillion stimulus package in response to the coronavirus pandemic.

Shrugging off concerns among some Republican Senators about an expansion of unemployment benefits, the Senate eventually voted 96 to 0 in favor of the bill.

The bill now heads to the Democrat-controlled House, which will be under pressure to quickly send the legislation to President Donald Trump's desk.

House Speaker Nancy Pelosi, D-Calif., said the House will take up the legislation on Friday with strong bipartisan support.

"The longer the crisis lasts the more likely that even good quality businesses will fail and unemployment will climb higher - hence the importance of the agreement on the fiscal package that can provide support for key industries and small businesses," said ING Chief International Economist James Knightley.

Sector News

Utilities stocks are turning in some of the market's best performances in mid-day trading, with the Dow Jones Utility Average spiking by 7.1 percent. The average continues to recover after ending Monday's trading at its lowest closing level in over four years.

Substantial strength has also emerged among oil stocks, as reflected by the 6.5 percent jump by the NYSE Arca Oil Index. The rally by oil stocks comes even though the price of crude oil for May delivery is slumping $1.01 to $23.48 a barrel.

Commercial real estate, telecom, banking, and healthcare stocks are also seeing considerable strength on the day, moving sharply higher along with most of the other major sectors.

Meanwhile, gold stocks are among the few groups bucking the uptrend, with the NYSE Arca Gold Bugs Index tumbling by 2.4 percent despite an increase by the price of gold.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index plunged by 4.5 percent, while China's Shanghai Composite Index fell by 0.6 percent.

Meanwhile, the major European markets have turned positive over the course of the session. While the German DAX Index has risen by 0.6 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are up by 1 percent and 1.1 percent, respectively.

In the bond market, treasuries have given back ground after an initial jump but remain positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.7 basis points at 0.821 percent.

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