NEW YORK – Stocks marched higher for a third straight day Thursday as a massive coronavirus relief bill gets closer to passing Congress and Wall Street took some historically bad unemployment figures in stride.
The S&P 500 rose 6.2%, bringing its three-day rally to 17.6%. The Dow industrials have risen an even steeper 21.3% since Monday.
Nearly 3.3 million Americans applied for unemployment benefits last week, easily shattering the prior record set in 1982, as layoffs and business shutdowns sweep across the country.
Analysts said the market shot higher Thursday because Wall Street knew the bad news on unemployment was coming. The gains earlier this week came as Capitol Hill and the Federal Reserve promised an astonishing amount of aid for the economy and markets, hoping to support them as the outbreak causes more businesses to shut down by the day.
“There is no sugarcoating these numbers – they are bad,” said Jamie Cox, managing partner for Harris Financial Group. “Markets have had several days to digest what everyone knew was coming; therefore, the market response to these numbers may differ than what people might expect.”
Despite the big gains, the S&P 500 remains 22% below its February high and analysts expect more dire economic headlines, and market turbulence, in the days ahead.
Companies are also expected to report discouraging results in just a few weeks as earnings season begins. Very few have dared to issue forecasts capturing how big a hit the virus will inflict on their profits.
Rising expectations that Congress would approve an unprecedented rescue package for the economy have driven stocks higher this week. Late Wednesday, the Senate unanimously approved the $2.2 trillion plan, which includes direct payments to U.S. households and aid to hard-hit industries. The House of Representatives is expected to approve it Friday.
The prospect of a big financial shot in the arm for businesses and households helped offset some of the concerns about the steep job losses the economy is beginning to see due to the coronavirus.
Investors still need to see stability in banks and, especially, in oil prices to maintain confidence, because markets could be in for another slide if oil goes below $20 a barrel, said Andrew Slimmon, managing director and senior portfolio manager at Morgan Stanley Investment Management.
Benchmark U.S. oil slid 7.7% to settle at $22.60 a barrel. Goldman Sachs has forecast that it will fall well below $20 a barrel in the next two months because storage will be filled to the brim and wells will have to be shut in.
“I wouldn't necessarily say that where the market was yesterday we won't see that again,” Slimmon said. “There is bad news still to come.”