Dow closes 3.4% higher following latest US coronavirus developments
Wall Street stocks ended this week with substantial gains as the market welcomed results from New York and other coronavirus hotspots indicating the outbreak was levelling off.
The Dow Jones Industrial Average soared 779.71 points (3.44 per cent) to 23,433.57.
The broad-based S&P 500 was up 90.57 points (3.41 per cent) to 2,749.98, while the tech-rich Nasdaq Composite Index increased 203.64 points (2.58 per cent) to 8,090.90.
Throughout the day stocks were in positive territory, picking up steam after New York Governor Andrew Cuomo said the state had recorded 779 deaths over the last day, a new high, but that the hospitalisation rate continued to decrease due to social confinement orders.
Cuomo told reporters, “We are flattening the curve.”
The strengthened results from New York and several other hotspots have stabilised investment bulls who think the US economy may be able to scale up soon.
“The virus is now at its peak or very near to peaking, which increases hope that we will be able to resume business activity again by the end of May,” said LBBW’s Karl Haeling.
But other analysts are even more cautious, noting that in other parts of the United States, the virus trajectory remains highly alarming.
There is also scepticism about how much longer social distancing steps will be required, weakening the outlook for growth and setting the stage for stocks to potentially retest the depths from a few weeks ago.
In its baseline forecast, Oxford Economics predicted the lockdown steps extend for six to 12 weeks but issues a note Wednesday pointing to a potential downside scenario where lockdowns are extended into the third quarter, culminating in a global contraction of eight per cent during that time.
“Investors seem to be ‘looking beyond the valley,’ even though the depth and length of this gorge continues to expand,” said CFRA Research’s Sam Stovall.
“Now that China back to work, combined with a prominent crest of NY COVID-19 caseloads and congressional debates over new stimulus packages, investors appear able to re-embrace equities. Yet experience tells us that a retest is still possible.”