- The Dow Jones flipped wildly between gains and losses on Thursday.
- The stock market bulls ignored a miserable jobless claims report as Trump raised the price of oil.
- As the coronavirus shutdown continues, financial pressures on the balance sheets have removed crucial support from the Dow.
The Dow Jones rocked wildly on Thursday as a dizzying wave of economic headlines left investors delirious.
Donald Trump pushed the price of oil to its biggest one-day rally, while jobless claims in the United States have exceeded even the forecasts of the most downward economists.
The stock market remains at annual lows, but support for share buybacks has evaporated, putting intense pressure on the Dow and the S&P 500.
Dow falters as unemployment soars and oil prices soar
Today, the three main American stock market indices have undergone strong price fluctuations.
- The Dow Jones rose 205.67 points or 0.98% to 21,149.18.
- The S&P 500 climbed 0.94% to 2,493.78.
- The Nasdaq rose 0.44% to 7,393.08.
The commodities sector has gone completely wild, ignited by a dramatic movement of crude oil, which has risen more than 30% to its peak above $ 25 a barrel.
The move was sparked by a series of tweets from President Donald Trump, who said that Russia and Saudi Arabia will announce a reduction in production from 10 to 15 million barrels.
Given the importance of the price of oil to the United States and the global economy, Trump’s optimism caused the Dow to descend into a roller coaster as investors pondered the credibility of his claims.
Challenging a rally in the US dollar, the price of gold joined the party with a 3.2% move to $ 1,643.
Unemployment rate is heading towards 10%
Despite the slight rally by the Dow, there has been terrible economic data. The United States registered more than 6 million unemployment claims last week.
This more than doubled the reading from the previous week, which itself was a historic record. With only 3.5 million claims expected, Thursday’s liquidation could have been much worse.
Unemployment in the US is rapidly approaching 10%, and the rapid spread of the coronavirus is showing no sign of easing the economic pain anytime soon. As of Thursday afternoon, the United States had 234,462 confirmed cases of COVID-19.
In Europe, hopes for a peak in Italy have increased as the country has recorded its lowest total death in a week, although there are fears of underreported deaths. Spain continues to see a dramatic increase in cases, although its infection rate curve may stabilize.
Market Rises Continue To Support The Fed
With all the unhappiness and sadness, it is surprising to many to see the Dow Jones trading as solidly as it is.
While there are many theories about Dow Bulls’ confidence in buying the downside, they need to tackle the fact that one of the most obvious props of the stock market is disappearing.
The companies have aggressively bought back stocks in recent years, helping to raise share prices by more than $ 5 trillion among S&P 500 companies alone.
This fundamental bullishness suddenly disappeared thanks to the economic damage of COVID-19.
So what makes the Dow so strong?
In a comment to CCN.com, chief economist Sebastian Galy of Nordea Asset Management hypothesized that stock market investors trusted the effectiveness of the historic stimulus from the Federal Reserve and the Trump administration.
The stock markets are stabilizing today after setting their prices in a more realistic scenario in the United States. Many continue to build on the long-term belief inherent in the “apple pie,” namely the virtue of the United States, expressed in part by the innovation and skill of the Federal Reserve and, to a lesser extent, by the White House.
However, sentiment remains fragile in US stocks. One of Wall Street’s renowned short sellers, Jim Chanos, says he always sees opportunities everywhere – especially in growing debt-laden companies.
Dow 30 stocks: Boeing plunges into massive layoff program
A bright start to the day has faded in the Dow 30 while another tough day for the Boeing share.
The besieged aerospace giant slipped 6.9% to $ 121 after launching a sinister package of “voluntary layoffs” to all of its 161,000 staff.
These dramatic layoffs are linked to both the plight of the airline industry and the grounding of its infamous 737 MAX. The weakness has crossed the supply chain. General Electric – a supplier to Boeing – cut its engine department in half.
Given the rise in oil prices, it is not surprising to see Chevron and Exxon Mobil leading the index with gains of 9.9% and 6.2%.
The Walgreens Boots Alliance was Dow’s biggest loser, down 7.9% after its second-quarter earnings report revealed that its spike in coronavirus sales had dropped significantly.
This article was edited by Josiah Wilmoth.