A little bit of good news goes a long way on Wall Street these days.
In a fitting end to a chaotic week, US stocks surged Friday, recovering most of the prior day’s dramatic losses, after President Trump used a press conference to announce several steps to combat the coronavirus epidemic, whose spread triggered one of the most tumultuous weeks for the market since the 1929 crash.
It had been an encouraging but not great day during most of the trading session, following the 10 percent drop in the Dow Jones industrial average on Thursday, its steepest sell-off since the 1987 crash. The Dow was up 4 percent about the time the president began his televised news conference with less than an hour left before the closing bell. The blue-chip index dipped as he started his sometimes rambling comments, but then surged as he brought a series of public health experts to the microphone.
By the 4 p.m. close of regular trading, the Dow was up 9.4 percent, a gain of 1,980 points, the biggest one-day gain since 2008. The Standard & Poor’s 500 index and the Nasdaq posted nearly similar increases.
Sharp moves, up or down, aren’t unusual on Fridays, as traders seek to square away their positions going into the weekend. But this Friday, Trump definitely drove the market higher.
He declared a national emergency that he said would send up to $50 billion in federal funds to states to counter the outbreak. He also said doctors and hospitals would get more flexibility to treat patients, including remotely, and that new test kits would soon be widely available.
The mood of the news conference was more upbeat than Trump’s somber address to the nation on Wednesday night, when he announced an unexpected ban on many foreign travelers from Europe, and didn’t lay out the specifics for an economic recovery package that investors were waiting for. Stocks tumbled the next day, leaving us in a bear market, with all the main indexes down more than 20 percent from their recent peaks.
On Friday, Trump and members of his coronavirus task force emphasized the progress being made on getting test kits approved, including one from Thermo Fisher Scientific of Waltham that should be authorized soon. They didn’t dwell on the many ways in which daily life is being altered by the outbreak, and how they will hurt the economy.
The president also said interest on student loans would be waived and the government would scoop up crude oil for the nation’s strategic reserve to exploit the recent sharp drop in prices.
“I do think that his tone is a little bit different today, he sounds slightly more presidential," Jennifer Ellison, principal at San Francisco-based money-management firm Bingham, Osborn & Scarborough, told Bloomberg. “We have word that [Treasury Secretary Steven] Mnuchin and [House Speaker Nancy] Pelosi are talking as well," she said, referring to their negotiations on an economic aid package.
Oil prices, which collapsed last weekend amid a price war launched by Saudi Arabia, spiked nearly 7 percent on the president’s buying plan. The drop in oil prices had raised concerns about layoffs and loan defaults among the country’s energy producers.
How wild was the week? According to The Wall Street Journal, it was first time since the dark days of 1929 that the S&P 500 moved up or down by more than 4 percent over five straight sessions.
Despite Friday’s surge, the S&P 500 was down 8.8 percent for the week, while the Dow shed 10.4 percent and the Nasdaq lost 8.1 percent. Smaller stocks took a bigger hit, with the Russell 2000 down 16.5 percent.
The Dow remains in a bear market, down 21.5 percent since its Feb. 12 record high. The S&P 500 is off 19.9 percent since its Feb. 19 peak, just shy of the 20 percent drop that marks a bear market.
It’s important to note that most pros don’t think the market will settle down until we have a much clearer idea of how the coronavirus crisis will play out.
Investors need the answers to key questions: “When the virus will peak? How long will it last? How big of a hit to earnings will it be? And what’s the fiscal response from the government,” Jurrien Timmer, director of global macro at Fidelity Investments, said earlier this week.
The answer to his final question is getting closer. On Friday evening, Pelosi said House Democrats reached a deal with the Trump administration on a stimulus package aimed at providing sick leave and unemployment payments to workers and families affected by the pandemic.
For Friday the 13th, it could have been worse. But don’t forget the Ides of March.