Despite more than 6 million new job losses, the stock market opened higher on Thursday thanks to a timely announcement from the Federal Reserve, which will inject an additional $2.3 trillion into the U.S. economy amid ongoing uncertainty from the coronavirus pandemic.
At Thursday’s open, the Dow Jones industrial average gained nearly 2%, around 450 points, while the S&P 500 rose 1.5% and the Nasdaq Composite was up 1.3%.
Stocks got a boost after the Federal Reserve announced that it will inject another $2.3 trillion into the economy, with the money going to households and businesses as well as state and local governments.
The Fed’s actions were enough to outweigh another dismal weekly jobless claims report: 6.6 million people filed for first time unemployment last week.
Rising unemployment numbers are the latest indicator of how badly the coronavirus has hit the U.S. economy: Overall, more than 16 million Americans have filed for unemployment benefits over the last three weeks.
The latest jobless claims data and Fed announcement follow the stock market’s rally on Wednesday—both the Dow and S&P 500 gained more than 3%—after Senator Bernie Sanders dropped out of the presidential race and investors struck a more optimistic tone about the coronavirus outbreak soon turning a corner.
Wall Street has rallied in recent days thanks to the fact that new COVID-19 cases, both in the U.S. and globally, have started to slow since last week, according to data from Johns Hopkins University.
After Wednesday’s rally, the Dow and S&P 500 are both up over 20% from their low points on March 23. Both indexes are up more than 10% this week alone. Markets have steadily rebounded in recent weeks, taking solace in fiscal stimulus packages from the federal government and more recently, signs that coronavirus containment efforts are paying off.
“The massive number of suddenly unemployed and furloughed Americans speaks to the urgency of our economic predicament, and the Federal Reserve is again responding in an equally massive way,” says Greg McBride, chief financial analyst for Bankrate. “Desperate times call for desperate measures and the Federal Reserve is throwing out all the stops.”
“With 16.8 million jobless claims in three weeks, the catastrophic scale of the COVID-19 crisis is even more apparent,” according to Ron Temple, head of U.S. equities at Lazard Asset Management. “While the Fed has acted quickly, it is critical that the fiscal stimulus in the CARES Act be delivered immediately and be of sufficient size to support the economy,” he says.