US stocks jumped again Thursday as the Federal Reserve’s latest effort to shore up the coronavirus-battered economy overshadowed another sign of the damage the pandemic has already done.
The Dow Jones industrial average rose as much as 575.42 points, or 2.4 percent, after the central bank’s announcement of a $2.3 trillion loan program to help households, employers and local governments amid the pandemic.
The S&P 500 and the Nasdaq Composite climbed as much as roughly 2.5 and 1.7 percent, respectively, as Wall Street shrugged off a federal report showing 6.6 million Americans filed for unemployment benefits last week.
The Fed’s announcement was released at the same time as those brutal figures from the US Department of Labor, suggesting the bank wanted to give investors some good news along with the bad.
“it was clearly orchestrated,” said Quincy Krosby, chief market strategist for Prudential Financial. “The message is clear and that is that the federal government … is prepared to do whatever it takes. For the market, it’s a judgment: Will it be enough?”
Stock futures had traded roughly flat before the Fed unveiled its loan scheme, which includes the purchase of up to $600 billion in loans for small and mid-size businesses. The bank said it will also buy as much as $500 billion in short-term notes from US states, counties and large cities.
Investors appeared to cheer strong language from Fed Chair Jerome Powell that accompanied the move. He said in a Thursday speech that the bank would use its authorities “forcefully, proactively and aggressively” and keep interest rates near zero until it’s confident the economy is on more solid ground.
“They’re fully in. They’ve drunk the Kool-Aid,” said Anthony Denier, CEO of the trading platform Webull. “It’s no longer Trump yelling at Powell to reduce rates. They’re all kind of on the same side right now.”
The jump in stocks also came amid reports that Saudi Arabia, Russia and other countries were negotiating a deal to cut global oil production by as many as 20 million barrels a day.
The deal would shore up global oil prices, which have plummeted since Saudi Arabia ramped up production in a spat with Russia. The low prices posed a threat to debt-laden US oil companies as the coronavirus crisis caused demand for oil to sink.
“The more they can cut, the better it is for the oil producers,” Krosby said.
Amid Thursday’s early rally, Wall Street is on pace to post significant gains for the week before the markets close for the long Easter weekend. The Dow was up 2,956.46 points, or 14 percent, for the week at Thursday’s intraday high, while the S&P had gained 13.2 percent and the tech-heavy Nasdaq was about 11.6 percent in the green.