Wall Street Close: US benchmarks were rallying hard on Thursday, cheering stimulus

US benchmarks were rallying hard on Thursday on a strongly positive week for stocks as stimulus kicks investors risk appetites back into play as the US Senate passage of a $2 trillion stimulus package spurred the markets on, seemingly ignoring the hard data with the first-time jobless claims ran up to a record 3.28 million last week.

The Dow Jones Industrial Average, ended around 1,352 points higher, a gain of 6.4%, to end near 22,552, while the S&P 500 climbed around 155 points, or 6.12, to close near 2,630. The Nasdaq Composite finished around 7,798, a gain of 413 points, or 5.6%.

Analysts at ANZ Bank explained that this week saw a record rise in initial claims, up 3 million to 3.28m. "Treasury Secretary Mnuchin said the initial claims data were “not relevant because of the economic support being made available”. It is now possible to take home more on unemployment claims than it is working for the median wage (USD950 per week). The difference between now and the great depression is the social welfare safety net."

Stimulus, stimulus, stimulus

Markets also tuned into the US Federal Reserve Chair Powell who was interviewed on NBC overnight. As ever, he was optimistic about the US economy and was expecting it to bounce back quite vigorously once it reopens after the COVID-19 shutdown. Effectively, the Fed is confident as so is the government that they have the right bazookas in place firing all guns a the threat of the economic meltdown pertaining to the virus. Powell went on further to say that the Fed could leverage the USD454bn that the Treasury is making available to support lending to corporates by up to 10 times. "That would effectively treble the size of the USD2trn rescue package to USD6trn, if needed, and take “lender of last resort” to a whole different level. Financial markets chose to focus on that, rather than the emerging dramatic weakness in the economic data," analysts at ANZ Bank explained.

"The US equity bounce has now reached 15-19% in the main indexes, on both technical volatility and optimism that the enormous USD2trn fiscal package that’s now been passed will save the day. Quarter-end rebalancing flows may also have had a meaningful say. Are we past the worst? Economically we are just getting started, clearly, but equity markets dance to a different beat and it is true that the most vigorous forced selling appears to be over now the Fed has brought out the bazookas. "

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