U.S. stocks closed modestly higher Thursday afternoon, in another volatile session, as central banks and governments pledged support for the economic shocks from the coronavirus pandemic that’s claimed more than 8,000 lives around the globe.
Investors were watching moves from the Federal Reserve, which announced a facility to backstop money-market mutual funds, and the European Central Bank after it rolled out an expanded asset-purchase program, while looking forward to the potential of aggressive fiscal stimulus reported to be under discussion in Congress.
What did the major indexes do?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.53% gained 188.27 points, or 1%, to 20,081.19. The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.56% rose 0.5%, or 11.29 points, to close at 2,409.39. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.38% advanced 160.73 points, or 2.3% to end the session at 7,150.58.
On Wednesday, the Dow fell 1,338.46 points, or 6.3%, to end at 19,898.92, for its lowest close since Feb. 2, 2017. The S&P 500 dropped 131.09 points, or 5.2%, to end at 2,398.10, while the Nasdaq Composite lost 344.94 points to end at 6,989.84, down 4.7%.
What drove the market?
Financial markets remained volatile, with gyrations this week tied to investors liquidating stocks as well as other assets, including gold and government bonds, while pushing up the U.S. dollar in a dash for cash.
The Fed early Thursday announced the opening of additional, temporary dollar swap lines with central banks in an effort to address a global scramble for dollars, following an announcement late Wednesday of a new Money Market Mutual Fund Liquidity Facility, or MMLF, to assist money-market funds in meeting demands for redemptions by households and other investors.
Investors were eyeing these developments, along with ongoing briefings from federal officials as the number of cases of COVID-19 infections rose above 10,000 in the U.S. for the first time Thursday, according to data from Johns Hopkins University. Reports that Congress is discussing a fiscal stimulus package of more than $1 trillion also garnering attention.
“We’ve been hearing pretty regularly about new monetary and fiscal stimulus — each day they’re presenting programs to quiet the markets,” said Randy Frederick, vice president of trading and derivatives with the Schwab Center for Financial Research told MarketWatch. “There’s a lot of things the Fed and Congress can do and they’re going to keep pulling them out.”
That said, “we still have not had two consecutive up days in a long time,” he warned. “The problem are the down days are bigger and more frequent,” and the markets will remain subject to the success or failure of efforts to contain the virus, while a great deal of uncertainty remains.
Elsewhere, The Bank of England on Thursday cut its bank rate by an additional 15 basis points to 0.1% and increased its bond-buying program.
The European Central Bank, in an emergency meeting, said it was launching a new program that would allow it to buy 750 billion euros ($820 billion) in government and private sector bonds as well as commercial paper.
Also late Wednesday, President Donald Trump signed a coronavirus bill approved by the House and Senate that targets paid leave and testing, as lawmakers and the Trump administration already are looking ahead to huge stimulus measures and other programs aimed at cushioning the economy from the blow created by the pandemic.