Before The Bell
-The stock market, coming off of its worst week since the last financial crisis more than a decade ago and staring in the face of the most difficult month since the Great Depression year of 1931, began the current week on a soft note, with equities selling off anew. This latest downturn came as the Federal Reserve took an even more aggressive monetary stance. Then, the equity market weakened into the late stages of the session as the Senate could not muster the votes to pass a $2 trillion stimulus bill.
Then, after further negotiations later on Monday, and with signs that the Senate Minority Leader and the Treasury Secretary apparently were getting close to a deal, the equity futures in the pre-market were rising to their limit, signaling a strong opening yesterday morning. And on cue, the stock market did surge at the start of trading, with the Dow Jones Industrial Average quickly jumping by 1,300 points. There would be no pulling back as the morning pressed on. In all the Dow would be up by 1,800 points as the noon hour arrived.
The advance would then continue into the afternoon on continuing hopes for the passage of the stimulus bill. And even though there was no passage during the session, just the expectation of this progress would be enough to keep the bulls on board. In fact, save for some momentary profit taking in mid-afternoon, the market would continue to tack on to its advance. In fact, the buying would accelerate into the close, so that when all was said and done, the stock market would end at session highs.
In sum, yesterday would wind up being the best day for stocks since 1933 in percentage terms, with the gain for the Dow Industrials of 2,113 being the largest ever. Moreover, the S&P 500 would tack on 210 points and the NASDAQ would jump 557 points. Some of the most beaten down stocks led the way, with outsized gains in United Technologies (UTX) and International Business Machines (IBM). Also surging in price was the crestfallen Walt Disney (DIS) stock.
After the close, reports continued to circulate that negotiators were nearing an accord on the $2 trillion U.S. stimulus package to combat the coronavirus. But there still had been no bill passed as of last evening, as some seemingly modest, yet important, issues remained to be finalized. As to the markets, Asia was higher in the early even following the historic rebound on Wall Street, but our futures were modestly in the red. An agreement on the aforementioned $2 trillion package likely is needed to keep the rally sustainable.
And that agreement did come to fruition in the early hours of the morning. As we look ahead to a new day and after yesterday's fireworks, the U.S. futures are pointing to a slightly lower start this morning, despite the stimulus package. – Harvey S. Katz, CFA