3.3 million unemployed and stocks have biggest 3-day rally since 1931

Today it was all about weekly Unemployment Claims…the first real glimpse at just how much COVID-19 and the call for “social distancing” has impacted the economy and workforce.

And today’s numbers were even worse than most economists expected.

In just 1 week, 3.3 million people applied for unemployment.

For comparison, only 281,000 filed for unemployment the previous week.

And before today, the worst week on record was in 1982 when 695,000 filed for unemployment (the peak in the Great Recession was just 665,000 in a week).

Pennsylvania had the most jobless applicants, at a staggering 378,908.

The major indices were negative before the report. But after the astonishing jobless figure, stocks actually rallied!

So why the heck did stocks rally?

It could be that in spite of the bad jobless claims the bad report is now behind us.

There’s also some optimism over the $2 trillion economic stimulus bill that was passed by the Senate. The bill now goes to the House (expected to pass on Friday).

Or maybe it’s the stimulus checks?

As part of the stimulus deal, individuals will get up to $1,200 and married couples will get $2,400 with $500 added for every child (based on 2019 tax returns).

Treasury Secretary Steve Mnuchin said that checks could be going out within 3 weeks.

Whatever the case might be, stocks rallied for most of the day and saw another surge into the close.

The DOW finished higher for the 3rd day in a row.

In fact, it was the the biggest 3-day rally since 1931 for the DOW!

Here’s where the major indices ended the day:

• The S&P finished with a 6.2% gain. Up 155 points, the S&P ended at 2,630.
• The DOW ended higher by 6.4%. Adding 1,352 points the DOW closed at 22,552.
• The NASDAQ was up 5.6%. With a 413 point loss, the NASDAQ finished at 7,797.

Crude Oil (CL) gave up the last 3 day of gains. With a 7.7% loss, Crude Oil finished at $22.60 a barrel.

The U.S. dollar was hit after today’s unemployment numbers. The Dollar Index (DX) lost 1.5%.

But it wasn’t all bad…the EUR/USD Power Spread (long the EUR/USD Call Spread) that we put on last night in Power Spreads training worked out nicely on the news!

Yesterday, Ben Bernanke gave his thoughts about the economy (he expects a quick rebound after a “very sharp” recession).

And today, the infamous trader Paul Tudor Jones said that after a retest of lows he expects “stocks will be higher in 3 to 5 months.”

Could be true.

But on the other hand, we expect a VERY tough earnings season and should remind everyone to “trade what you SEE, not what you THINK!”