The Dow finished solidly lower Monday, and the broader market ended mixed for the major U.S. stock benchmarks, as investors mulled hurdles to restarting the economy.
How did major indexes fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.44% shed 109.33 points, or 0.5%, to end at 24,221.99. The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.77% gained less than a point to close at 2,930.19. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.49% advanced 71.02 points, or 0.8%, to finish at 9,192.34.
Stocks posted back-to-back gains Thursday and Friday that left the Dow up 2.6% for the week at 24,331.32, while the S&P 500 saw weekly rise of 3.5% to 2,929.80. The Nasdaq Composite jumped 6% last week to 9,121.32.
Equities have bounced back strongly after the S&P 500 dropped by roughly a third from a February record high through March 23. Monday’s close left the Dow 18% below its all-time finish, while the S&P 500 is 13.5% below its record close and the Nasdaq was 6.4% away from its record finish.
What drove the market?
The S&P 500 and Nasdaq booked three consecutive sessions of gains Monday, while the Dow snapped a two-day win streak, as investors braced for a bumpy road to reopening the U.S. economy amid the pandemic, which in April claimed more than 20 million jobs and pushed the unemployment rate to 14.7%.
“In the near-term, are we set up for some disappointment? Sure, especially as we struggle with how to reopen parts of the economy again,” said Brian Levitt, global market strategist for Invesco, in an interview with MarketWatch.
Hopes that growth in the U.S. will rebound swiftly have been fueled by a slowdown in the rate of COVID-19 infections and efforts toward easing coronavirus-related social restrictions in parts of the country. Although there are some concerns that stock gains have been led by big-tech companies that benefit from stay-at-home orders, rather than sectors like financial stocks that typically lead in a recovery.
Randal Quarles, the Federal Reserve’s vice chairman for banking supervision, said the central bank will use all of its financial firepower to protect the U.S. banking system from the coronavirus crisis, while underscoring that banking organizations aren’t currently a source of strain, even though families and businesses struggle to pay their bills.
The continued rise in infections in some states and cities also could cast doubt on the recovery under foot. In addition, a hasty reopening that leads to second wave of infections, is another scenario unnerving investors.
Another wild card is whether policy makers will continue to attempt to easy economic fallout from the pandemic.
BlackRock Investment Institute expects growth to be lower “as long as authorities deliver an overwhelming fiscal and monetary policy response to bridge businesses and households through the shock,” wrote Jean Boivin, head of the investment institute, and his team.
“The main risk to our view: The decisive policy response is not delivered in a successful and timely fashion, causing lasting damage to the economy,” BlackRock said.
Bullish investors point to a ramp up in federal spending aimed at cushioning the economy as a catalyst for a recovery. Even more so, investors have argued that efforts by the Federal Reserve to backstop lending and ensure market functioning have fueled the rebound in U.S. stocks and parts of the debt markets.
Treasury Secretary Steven Mnuchin said it may take a couple of weeks before new spending bills were announced. But he also said the administration was unfazed by spending $3 trillion to help shore up the economy, in an interview with CNBC on Monday.