Stocks capped a wobbly day on Wall Street with solid gains Thursday, reflecting cautious optimism among investors that emergency action by the government and central banks will cushion the global economy from a recession caused by the coronavirus pandemic.
The swings in the market were markedly less volatile than recent days. The Dow Jones Industrial Average gained almost 200 points, or 0.9%. The S&P 500 rose 0.5% after bouncing between a gain of 2.9% and a loss of 3.3% early. That would be a notable change in normal times, but the index has had eight straight days where it bounced up or down between 4.9% and 12%.
In another sign that shell-shocked investors were becoming a little more willing to hold riskier assets, stocks of smaller companies rose far more than the rest of the market. Those stocks had taken some of the heaviest losses since the sell-off began in early March.
Markets have been so volatile because investors are weighing the increasing likelihood of a recession on one hand against huge, emergency efforts to prop up the economy on the other. Markets got more of each on Thursday.
The number of Americans filing for unemployment benefits jumped by 70,000 last week, more than economists expected, in one of the first signs of layoffs sweeping across the country. Wide swaths of the economy are grinding closer to a standstill, from the travel industry to restaurants, as authorities ask Americans to stay home to slow the spread of the virus.
But the world’s largest central banks announced their latest efforts to support financial markets and the economy. The European Central Bank launched an expanded program to buy up to 750 billion euros ($820 billion) in bonds, and the Bank of England cut its key interest rate to a record low of 0.1%.
The Federal Reserve unveiled measures to support money-market funds and the borrowing of dollars as investors in markets worldwide hurry to build up dollars and cash. The dash for cash has strained markets, and sellers of even high-quality bonds say they’re having difficulty finding buyers at reasonable prices.
Investors also appeared encouraged by reports that China is set to ramp up stimulus spending after the province where the virus first emerged showed no new infections on Wednesday.
The price of U.S. crude oil notched its biggest one-day jump on record Thursday, climbing nearly 24%. With the gain, oil recouped nearly all its losses from the day before. Traders likely bid up oil prices following reports saying the U.S. may intervene in an oil price war between Saudi Arabia and Russia that’s helped knock oil prices into a steep skid this month.
The Dow rose 188 points, or 0.9%, to 20,087. It had been down as much as 721 points earlier and as high as 543. The Nasdaq, which is dominated by tech giants such as Apple, gained 2.3%. The Russell 2000 index of smaller company stocks surged 6.8%.
The S&P 500, which drives movements for most 401(k) accounts more than other indexes, is down roughly 29% since its record exactly a month ago and close to its lowest point since late 2018.
European stocks swung from gains to losses and back to gains. Asian markets dropped following the brutal 5.1% loss for U.S. stocks the prior day.
The New York Stock Exchange said Wednesday it will temporarily close its trading floor and moving to all-electronic trading beginning Monday after two employees tested positive for coronavirus.