By Anna Isaac, Chong Koh Ping and Karen Langley
U.S. stocks rose Wednesday, building on their gains for the
week, as investors parsed signs that the spread of the coronavirus
could be stabilizing in hard-hit locations.
The Dow Jones Industrial Average added 476 points, or 2.1%. The
S&P 500 gained 2.1%, and the Nasdaq Composite rose 1.7%.
Positive signs in data on hospitalizations and intensive care
admissions. suggest the number of new Covid-19 cases in New York
could be stabilizing, though health officials have warned that
people can't let down their guard.
"The market clearly is reacting Monday, to a certain extent
yesterday and even today to incremental news that at the margin is
a little better in terms of peaking of the virus, perhaps in Italy,
perhaps in Spain, perhaps in New York City," said Hank Smith,
co-chief investment officer at Haverford Trust.
Still, the U.S. death toll from the coronavirus has risen, with
nearly 50% more deaths Tuesday than any previous day in the
epidemic, according to a Wall Street Journal analysis of data from
Johns Hopkins University. Elsewhere, European countries with
falling infection rates began easing their restrictions, while some
Asian leaders called for extended lockdowns to fight the
pandemic.
Stocks have swung wildly in recent weeks as money managers
grapple with how the pandemic has affected the value of businesses
in every industry. The S&P 500 has climbed 9.1% this week but
is down 16% in 2020.
"This is a time of unprecedented uncertainty," said Brian
Yacktman, chief investment officer at YCG Investments. "What we're
seeing is a complete ping-pong match with markets bouncing around
so much because nobody knows how things will shake out in the short
run."
The gains in U.S. stocks Wednesday were broad, with all 11
sectors of the S&P 500 gaining, led by the real estate and
energy groups.
In trying to assess the depth of the looming recession that will
be triggered by the coronavirus shutdown, some investors are
examining the support offered by the Federal Reserve and how
quickly it will prove to be effective in bolstering economic
activity.
As well as slashing interest rates, the central bank unveiled
other aggressive measures in March, pledging to buy government
bonds, corporate-bond funds and municipal debt. It has boosted the
short-term cash markets and even arranged to lend directly to
companies.
"Bear markets tend to last longer than we think," said Gregory
Perdon, co-chief investment officer at Arbuthnot Latham. "Although
we have shock and awe with relaunching QE, we don't know that the
on-the-ground economic support is going to be there quickly."
Investors are watching closely for when U.S. infections peak and
start to decline and when shutdowns are lifted, according to Kelvin
Tay, regional chief investment officer at UBS Global Wealth
Management in Singapore. In time, he said, investor focus would
shift to 2021 corporate earnings and how quickly economic activity
can recover.
Since the Federal Reserve last month made use of a range of
tools -- adopting "the entire playbook" it developed during the
2008 global financial crisis -- in quick succession, market
functioning has improved, Mr. Tay said. "The markets have exited
the panic-selling mode."
U.S. crude futures edged up 1.1% to $23.89 a barrel. American
Petroleum Institute data released late Tuesday showed U.S. crude
inventories rose by more than expected. The prices are too low for
U.S. producers, leading to a significant slowdown in drilling
activity, ING strategists said.
The Energy Information Administration's short-term energy
outlook forecasts that U.S. oil output in 2020 will decline by
470,000 barrels a day from the previous year, versus a previous
forecast for growth of 770,000 barrels a day.
In a sign of investors' wavering risk appetite, the yield on the
10-year U.S. Treasury ticked down to 0.731%, from 0.735% Tuesday,
after rising earlier in the day.
European equities were mixed, with the pan-continental Stoxx
Europe 600 edging up less than 0.1%. Fresh survey data on Wednesday
showed that the German economy is expected to contract 9.8% in the
second quarter due to the coronavirus pandemic and the containment
measures put in place by authorities. That would be the sharpest
decline recorded in Germany since at least 1970.
The indicators came on top of the news that European Union
finance ministers had suspended talks on an economic crisis
response on Wednesday morning, underscoring the deep differences
within the bloc over how to share the mounting costs of the health
crisis. Ministers had hoped to agree to a package of measures that
could have provided half a trillion euros worth of support for the
economy.
"There's disappointment," said Florian Hense, European economist
at Berenberg Bank. "The longer it takes for finance ministers and
leaders to come up with a solution, the weaker their ability to
sell it to their home audience. We're not talking about economics
any longer, but politics."
Any agreement reached would be a welcome signal for markets, Mr.
Hense said.
In Asia, Japan's Nikkei 225 closed 2.1% higher. Late Tuesday,
the government said it plans to pay households and businesses
directly as part of a nearly $1 trillion economic package. It could
subsequently use stimulus money to encourage consumer spending and
travel.
Write to Anna Isaac at anna.isaac@wsj.com, Chong Koh Ping at
chong.kohping@wsj.com and Karen Langley at
karen.langley@wsj.com
(END) Dow Jones Newswires
April 08, 2020 14:19 ET (18:19 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.