Another wild week kicked off on Wall Street, as the Dow Jones Industrial Average jumped 200 points on Monday. Investors remain focused on the slowing global economy, amid the growing number of COVID-19 infections around the world.
The Dow opened 227 points higher before giving up most of its early gains. Both the S&P 500 and the Nasdaq Composite climbed 1.5 percent during early trading.
Asian and European stocks sank earlier in the day as the global coronavirus pandemic situation worsened. Oil prices continued to tank, crashing to their lowest level since 2002 amid falling demand.
Last week the Dow posted its biggest weekly gain since 1938, surging more than 12 percent. The S&P 500 and Nasdaq are coming off their best week since 2009, after growing 10.3 percent and 9.1 percent, respectively. The sharp gains were sparked in part by the prospect of massive fiscal and monetary stimulus, as US lawmakers put together a $2 trillion package aimed at cushioning the blow of the pandemic.
“Bulls staged an epic comeback,” Ken Berman, strategist at Gorilla Trades, told CNBC. “Despite the rally … the uncertainty regarding the length of the necessary but economically damaging global lockdowns continues to weigh on risk assets.”
Berman added that “The technical picture continues to be bearish across the board, despite the mid-week surge in stocks, with all of the key trend indicators still pointing lower.” He noted that the major averages are still below their respective moving-day averages, even after last week’s strong gains.
UBS strategists said on Monday that “selling fatigue” may have kicked in as investors were no longer reacting as wildly to incremental bad news as they have been in recent weeks. “However, both because infection rates are likely to keep rising for some time, and also because in cash equity markets we have not yet seen a capitulation in the core positions in growth-style stocks, it may be early to say a firm bottom has already been made,” strategists said, in a note seen by MarketWatch.
US President Donald Trump said on Sunday that he had extended social-distancing guidelines through April 30. He had earlier indicated a desire to begin lifting restrictions by Easter Sunday, on April 12. The death rate is likely to peak in two weeks, Trump said, adding that the US would be “well on its way to recovery” by early June.
Worldwide, the number of coronavirus cases continue to climb. There are now more than 739,000 cases of Covid-19 and at least 35,000 people have died. The United States overtook Italy and China as the country with the most cases at 142,000. Nearly half of all the US cases occurred in New York.
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