Stocks End Worst Week Since March Despite Dow Rallying Almost 500 Points !!

TOPLINE: The stock exchange rebounded slightly on Friday, attempting to recoup a number of its losses from days earlier when fears over a resurgence of coronavirus cases led to the worst market drop since March.




KEY FACTS

  • The stock market index Industrial Average was up 1.9%, nearly 500 points, on Friday, while the S&P 500 rose 1.3% and also the tech-heavy Nasdaq Composite gained 1%.
  • Stocks jumped by the maximum amount as 3% at the open, but Wall Street’s comeback faded somewhat within the early afternoon, with the S&P at one point briefly turning negative.
  • Despite Friday’s rally, both the Dow and S&P saw their biggest weekly losses since March 20. The moves come each day after the S&P and Dow posted their biggest single-day losses since the coronavirus sell-off in March, falling nearly 6% and seven, respectively.
  • Investors on Friday piled into stocks that will like a reopening of the economy: Cruise lines, airlines, and retailers all jumped. those self-same reopening stocks were hard-hit in Thursday’s sell-off, amid concerns a few resurgences of coronavirus

    cases as states start to reopen.
  • Many states that loosened lockdown restrictions have seen a spike in new cases: Texas and Florida, as an example, were among a number of the primary to reopen, but they're now reporting record numbers of hospitalizations.
  • Expectations for fast economic recovery are dwindling after the central bank on Wednesday provided a grim update on the economy: The financial organization forecasted unemployment will remain high for years and said interest rates will stay near zero until a minimum of 2022.

CRUCIAL QUOTE

“Stocks were overdue for a pullback after rallying quite 40% off the March lows and pricing in what we believe is a very optimistic economic outlook,” says Jeff Buchbinder, equity strategist for LPL Financial. “More COVID-19 spread during a few southern and western states and a dark outlook from the Fed provided the spark for a few of the froth to return out.”

CHIEF CRITIC

“We can’t clean up the economy again,” Treasury Secretary Steven Mnuchin told CNBC on Thursday. “I think we’ve learned that if you clean up the economy, you’re visiting create more damage,” he warned.

KEY BACKGROUND

While the market recovered a number of its losses from the brutal sell-off on Thursday, the S&P and Dow posted their biggest weekly losses since March 20, after they all dropped a minimum of 12% amid widespread economic shutdowns during the pandemic. Fed Chairman Jerome Powell reiterated at his group discussion on Wednesday that while “there is great uncertainty about the longer term,” the financial organization is strongly committed to doing “whatever we will, for as long because it takes” to assist support the economy. Before in the week, stocks had continued to rally on optimism about reopening the economy: The S&P 500 on Monday turned positive for 2020, fully recouping its losses from the coronavirus selloff earlier this year. But the market is now taking a large hit amid rising concerns over a resurgence of coronavirus cases.

FURTHER READING