Stocks regain some ground on a calmer day

New York Stock Exchange
Markets have been so volatile because investors are weighing the increasing likelihood of a recession on one hand against huge, emergency efforts to prop up the economy on the other.
(Richard Drew / Associated Press)

Stocks on Wall Street wobbled Thursday but ended the day with gains, reflecting cautious optimism among investors that emergency action by the U.S. government and central banks will cushion the global economy from a looming recession caused by the coronavirus pandemic.

The swings in the market were markedly less volatile than recent days. The Standard & Poor’s 500 index ended up 0.5% after bouncing between a gain of 2.9% and a loss of 3.3%. That would be a notable change in normal times, but the index was coming off eight straight days where it bounced up or down at least 4.9% and as much as 12%.

The Dow Jones industrial average gained 0.9%, or 188 points.

Meanwhile, oil prices soared, notching their biggest one-day gain.


In another sign that shell-shocked investors were becoming a little more willing to hold riskier assets, smaller-company stocks rose far more than the rest of the market. Those stocks had taken some of the heaviest losses since the sell-off began early this month.

Markets have been so volatile because investors are weighing the increasing likelihood of a recession on one hand against huge, emergency efforts to prop up the economy on the other. More of each arrived Thursday.

The number of Americans filing for unemployment benefits jumped by 70,000 last week, more than economists expected, in one of the first signs of layoffs sweeping across the country. Wide swaths of the economy are grinding closer to a standstill as authorities ask Americans to stay home to slow the spread of the virus. Another weak manufacturing report, this time in the mid-Atlantic region, added to the worries.

But the world’s largest central banks announced their latest efforts to support financial markets and the economy. The European Central Bank launched an expanded program to buy up to $820 billion in bonds, and the Bank of England cut its key interest rate to a record low of 0.1%.

The Federal Reserve unveiled measures to support money-market funds and the borrowing of dollars as investors in markets worldwide hurry to build up dollars and cash. The dash for cash has strained markets, and sellers of even high-quality bonds say they’re having difficulty finding buyers at reasonable prices. Many of the Fed’s moves, which are getting revived after being used in the 2008 financial crisis, are aimed at smoothing out operations in such markets.

“Every day there’s another announcement of what the stimulus is going to look like, but what seems to be apparent is the recognition of some in the administration that funding is going to have to be larger, more significant than initially expected,” said Quincy Krosby, chief market strategist at Prudential Financial.

Investors also appeared encouraged by reports that China is set to ramp up stimulus spending after the province where the virus first emerged showed no new infections Wednesday.

The price of U.S. crude oil notched its biggest one-day jump on record Thursday, climbing nearly 24%. With the gain, oil recouped nearly all its losses from the day before. Traders likely bid up oil prices after reports saying the U.S. may intervene in an oil-price war between Saudi Arabia and Russia that has helped knock oil prices into a steep skid this month.


Still, the market will likely remain volatile until investors see more economic data that shows just how badly the outbreak is hurting the economy.

“They’re doing what they can, and I’m not sure what else they can do,” said Sal Bruno, chief investment officer at IndexIQ.

The Dow finished the day at 20,087. It had been down as much as 721 points earlier and as high as 543. The Nasdaq, which is dominated by tech giants such as Apple, gained 2.3%. The Russell 2000 index of smaller-company stocks surged 6.8%.

The S&P 500, which drives movements for most 401(k) accounts more than other indexes, is down roughly 29% from the record high it reached a month ago and is close to its lowest point since late 2018.


Major indexes started the day down, then rose before and during a news conference led by President Trump to give updates on the outbreak. The gains mostly vanished as the indexes turned mixed. Then the indexes snapped back into the green.

European stocks swung from gains to losses and back to gains. Asian markets dropped following Wednesday’s brutal 5.1% loss for U.S. stocks.

Ultimately, investors say they need to see the number of new infections stop accelerating for the market’s extreme volatility to ease.

The total number of known infections has topped 220,000 worldwide, including nearly 85,000 people who had recovered. The death toll has crept toward 10,000.


For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases. Some people die.

Until the number of new cases peak, investors will struggle with uncertainty about how much to pay for a stock, bond or commodity when they don’t know how long the economic downturn will last. Many economists expect a sharp drop in the economy, but they disagree on how long it will take to bounce back.

The hope is that all the emergency actions by central banks and spending by governments can provide support for the economy in the meantime and soften the blow. The Trump administration has pitched lawmakers on a program that could flood $1 trillion into the economy, including checks sent directly to households.

The New York Stock Exchange said late Wednesday that it will temporarily close its trading floor and move to all-electronic trading beginning Monday after two employees tested positive for coronavirus. The exchange has also started medically screening all personnel who enter the building. Much stock trading has gone electronic in recent years, and there are far fewer floor brokers than there used to be.