Wall Street on Thursday closed out the trading week on a high as the US Federal Reserve unleashed another program designed to buoy local governments and businesses crushed by massive closures to stem the COVID-19 pandemic.
The benchmark S&P 500 index posted it best weekly gain since 1974, in a holiday-shortened week, bolstered by early signs that the pandemic was reaching a peak, as well as aggressive global stimulus.
Under the US$2.3 trillion package, the Fed said that it would work with banks to offer four-year loans to companies of up to 10,000 employees, while directly buying bonds of states, and more populous counties and cities.
“Buying junk bonds, oh my god, pretty much unexpected, so a very strong open, and all the beaten-up names, including energy, they took off,” Inverness Counsel chief investment strategist Tim Ghriskey said.
The financial subindex was up 5.19 percent, providing the biggest boost to the S&P 500, as banks rose sharply on the Fed’s backstop.
JPMorgan Chase & Co shares rose 8.97 percent, leading gains on the Dow Jones Industrial Average, while units of the iBoxx High Yield Corporate Bond Fund climbed 6.55 percent.
That helped take the sting out of another tough report on the labor market, with weekly initial unemployment claims topping the 6 million mark for a second straight week.
“Everyone is expecting really lousy earnings and really lousy economic data. It is all going to be focused on when does the rebound happen and what parts of the economy comes back the quickest,” Ghriskey said.
The defensive real estate and utilities subindices rose more than 4 percent.
The Dow Jones Industrial Average rose 285.8 points, or 1.22 percent, to close at 23,719.37, the S&P 500 gained 39.84 points, or 1.45 percent, to 2,789.82 and the NASDAQ Composite added 62.67 points, or 0.77 percent, to close at 8,153.58.
For the week, the Dow rose 12.7 percent, the S&P climbed 12.1 percent and the NASDAQ gained 10.6 percent.
While health experts have said people need to practice social distancing to contain the pandemic, the restrictions have strangled the US economy, and sparked widespread production cuts, layoffs and projections of a severe recession.
In a sign that the pandemic’s curve was flattening in the epicenter of the US outbreak, New York Governor Andrew Cuomo said that new hospitalizations fell to a fresh low of 200, although deaths spiked to another new high.
However, the three major indices finished well off their earlier highs as crude oil prices reversed course and turned lower as production cuts by OPEC+ were seen as not enough to offset the lack of demand.
The energy subindex fell 1.08 percent.
Walt Disney Co shares rose 3.39 percent after the company said its Disney+ streaming service had attracted more than 50 million paid users globally.
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