Wall St gains as investors mull stimulus


Wall Street has risen as US President Donald Trump followed last week’s massive fiscal stimulus package by extending his stay-at-home guidelines, leaving investors hopeful that the economic impact of the coronavirus could still be contained.

A record $US2.2 trillion ($A3.6 trillion) in aid and unprecedented policy easing from the Federal Reserve helped the S&P 500 post its biggest weekly percentage gain in over a decade last week, and the Dow Jones its best since 1938.

However, all three major stock indexes fell more than 3.0 per cent on Friday after the United States overtook China as the country with the most number of coronavirus cases.

The crisis has so far knocked $US7 trillion off the value of S&P 500 companies and without any clarity on how long it will take to quell the outbreak, Wall Street’s main indicators of future volatility remain at high levels.

“Massive monetary and fiscal spending is giving investors just enough breathing room to figure out the extent of the economic damage done,” said Stephen Innes, a markets strategist at AxiCorp.

“Prices are tentatively stabilising and risk is turning back on again as market makers are back replenishing their shopping list of go-to equities.”

Trump on Sunday dropped a hotly criticised plan to get the economy up and running again by mid-April after White House health experts argued strongly to extend the stay-at-home order to curtail the spread of the COVID-19 disease.

JPMorgan Chase & Co said on Saturday it expected real US gross domestic product (GDP) to fall 10 per cent in the first quarter and plunge 25 per cent in the second quarter.

The CBOE volatility index fell 3 points on Monday, but was still near levels far above those in 2018 and 2019.

“Until we’ve got some evidence that can help deal with the virus, it’s probably more choppy markets ahead,” said Noah Hamman, chief executive office of AdvisorShares in Bethesda, Maryland.

In early trading, the Dow Jones Industrial Average was up 83.28 points, or 0.38 per cent, at 21,720.06, the S&P 500 was up 25.18 points, or 0.99 per cent, at 2,566.65 and the Nasdaq Composite was up 93.46 points, or 1.25 per cent, at 7,595.84.

Of the 11 major S&P 500 sectors, only the energy index was in the red as US crude oil prices fell below $US20 for the first time in 18 years.

The healthcare sector was the second-biggest boost to the benchmark index as progress on coronavirus vaccines and tests being developed by Johnson & Johnson and Abbott Laboratories lifted their shares by about 4.0 per cent and 10 per cent respectively.

Norwegian Cruise Line Holdings Ltd, Royal Caribbean Cruises Ltd and Carnival Corp were again the top decliners after Berenberg slashed its price targets on cruise operators by about a third.

Declining issues almost matched advancers on both the NYSE and the Nasdaq.

The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded four new highs and eight new lows.

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