26.03.2020 21:28:14
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U.S. Move Sharply Higher As Traders Shrug Off Spike In Jobless Claims
(RTTNews) - Stocks moved sharply higher over the course of the trading session on Thursday as traders shrugged off data showing a spike in first-time jobless claims. The Dow and the S&P 500 closed higher for the third straight day, climbing further off Monday's three-year lows.
The major averages saw further upside going into the close, ending the day just off their highs of the session. The Dow spiked 1,351.62 points or 6.4 percent to 22,552.17, the Nasdaq soared 413.24 points or 5.6 percent to 7,797.54 and the S&P 500 skyrocketed 154.51 points or 6.2 percent to 2,630.07.
The rally on Wall Street came even though the Labor Department released a report before the start of trading showing first-time claims for unemployment benefits soared last week, as large swaths of the U.S. economy were shut down due to the coronavirus pandemic.
The Labor Department said initial jobless claims skyrocketed to 3,283,000 in the week ended March 21st, an increase of 3,001,000 from the previous week's revised level of 282,000.
Economists had expected jobless claims to spike to about 1.5 million from the 281,000 originally reported for the previous week.
While the increase in unemployment claims is staggering, economists noted the data may still underestimate the number of new claims due to constraints on the capacity of offices to process claims.
However, traders seem to believe the news was already priced into the markets with the sell-off seen over the past several weeks.
Any negative sentiment also seems to have been offset by last night's news that the Senate finally voted to approve a massive $2 trillion stimulus package in response to the coronavirus pandemic.
Shrugging off concerns among some Republican Senators about an expansion of unemployment benefits, the Senate eventually voted 96 to 0 in favor of the bill.
The bill now heads to the Democrat-controlled House, which will be under pressure to quickly send the legislation to President Donald Trump's desk.
House Speaker Nancy Pelosi, D-Calif., said the House will take up the legislation on Friday with strong bipartisan support.
"The longer the crisis lasts the more likely that even good quality businesses will fail and unemployment will climb higher - hence the importance of the agreement on the fiscal package that can provide support for key industries and small businesses," said ING Chief International Economist James Knightley.
Sector News
Utilities stocks turned in some of the market's best performances, with the Dow Jones Utility Average spiking by 8.6 percent. The average continued to recover after ending Monday's trading at its lowest closing level in over four years.
Substantial strength was also visible among computer hardware stocks, as reflected by the 8.1 percent jump by the NYSE Arca Computer Hardware Index.
Banking stocks also saw considerable strength on the day, driving the KBW Bank Index up by 8.1 percent.
Commercial real estate, telecom, health care and semiconductor stocks also showed significant moves to the upside amid broad based buying interest.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index plunged by 4.5 percent, while China's Shanghai Composite Index fell by 0.6 percent.
Meanwhile, the major European markets turned positive over the course of the session. While the German DAX Index jumped by 1.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index surged up by 2.2 percent and 2.5 percent, respectively.
In the bond market, treasuries fluctuated after an initial jump but managed to remain firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.7 basis points at 0.811 percent.
Looking Ahead
Reports on personal income and spending and consumer sentiment are due to be released on Friday but are not likely to attract much attention.
Traders are more likely to keep an eye on developments on Capitol Hill, where the House will be seeking to pass the stimulus bill without forcing all members to return to Washington.
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