U.S. stocks posted the biggest weekly gain since 1974 as investors looked past staggering jobless numbers when the Federal Reserve released new measures to cushion the fallout from the coronavirus. Oil fell as investors saw a supply-curb proposal as insufficient.
The S&P 500 Index rallied for the third time in four days, bringing this week’s increase to 12 per cent. The Fed announced another series of sweeping steps to provide as much as US$2.3 trillion in additional aid just as data showed the number of claims for unemployment benefits surged for a third week. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, said U.S. fatalities from COVID-19 may be far fewer than earlier projections.
Canada’s main stock index ended its best week in more than a decade as a massive intervention by the U.S. Federal Reserve offset weak employment numbers on both sides of the border.
The S&P/TSX composite index closed up 240.92 points at 14,166.63, the highest closing in nearly a month. Markets are closed for Good Friday.
In New York, the Dow Jones industrial average was up 285.80 points at 23,719,37. The S&P 500 index was up 39.84 points at 2,789.82, while the Nasdaq composite was up 62.67 points at 8,153.58.
“The Fed news is really bullish (along with global fiscal news) if we have confidence on ways to deal with the COVID bounce-back and ultimate vaccine solution,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “So positive outcomes on that front lead to fair value estimates going up, improving the risk reward from this level.”
Oil slipped, reversing earlier gains, as investors saw OPEC+ supply-curb proposal as insufficient to offset estimates for demand destruction from the Covid-19 outbreak. The producer group, which includes Saudi Arabia and Russia, is set to cut 10 million barrels a day of its oil output for two months.
Fed Chairman Jerome Powell reiterated that the U.S. central bank was committed to using all its powers to help the country recover.
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The Fed will wade into the municipal-bond market to an unprecedented degree, can now purchase “fallen angel” bonds from companies that have recently lost their investment-grade ratings, and has expanded its Term Asset-Backed Securities Loan Facility to include top-rated commercial mortgage-backed securities and collateralized loan obligations.
The surprise pledge from the Fed to buy recently downgraded corporate bonds boosted some of the biggest ETFs tracking the securities. The US$14.8 billion iShares iBoxx High Yield Corporate Bond ETF surged the most since January 2009.
Gold closed at the highest since late 2012 as investors sought insurance against the possibility of further economic slowing.
Elsewhere, the Stoxx Europe 600 Index rose. Government bonds in the region gained amid reports that Italy, Spain and the U.K. may extend lockdowns to combat the coronavirus outbreak. Most Asian stocks rose, though Japanese shares retreated.