Wall Street ends manic week with a gain, led by tech stocks

NEW YORK (AP) – In a manic week full of previously unthinkable market moves, Wall Street ended on Friday with one reminiscent of what things were like before the coronavirus outbreak upended everything.

The S&P 500 glided to a gain of 1.4 per cent, with Apple, Microsoft and other technology stocks leading the way, as they did so many times before the economy shut down in hopes of slowing the spread of the outbreak. The bond market was quiet, while crude prices climbed again.

The gains offered a soothing coda for a wild week, which began with Monday’s astonishing plummet for oil and carried through Thursday’s sudden disappearance of a morning stock rally, as markets pinballed from fear to hope and back again.

“The market sort of feels like Dorothy coming to the crossroads and has yet to meet the scarecrow to tell her which way to go,” said Chief Investment Strategist at CFRA Sam Stovall.

The S&P 500 still lost 1.3 per cent for the week as worries about the economic damage dealt by the coronavirus outbreak outweighed hopes that businesses could soon reopen. That snapped the first two-week winning streak for the S&P 500 since it began selling off in February.

Reports piled higher through the week showing the pandemic is bludgeoning the economy even more than economists had feared. Roughly one in six United States (US) workers has filed for unemployment benefits over the last five weeks.

A woman wearing a mask walks past an electronic stock board at a securities firm in Tokyo. PHOTO: AP

The damage is so severe that a heavily divided Congress has reached bipartisan agreement on massive support for the economy. US President Donald Trump signed a bill Friday to provide nearly USD500 billion more, including loans for small businesses and aid for hospitals.

The big question for markets is when the economy can reopen, said Head of Trading and Research at Harvest Volatility Management Mike Zigmont. Businesses can get by for a few months on government help, he said, but if the shutdown drags on longer they could be permanently damaged.

Many investors have essentially agreed to swallow horrific corporate profits and economic data in upcoming months, and they’re turning their focus to who can survive and eventually grow their profits in the future.

Next week will be one of the busiest of this earnings season, with more than 150 companies in the S&P 500 reporting how much they made during the first three months of the year.

Many companies have been pulling their profit forecasts entirely for 2020 given all the uncertainty, and Wall Street is slashing its own estimates.

“I don’t really think that’s added to the concern of investors because they assume that companies will be doing a lot of writing down in this bad year so that 2021 could look even better,” said CFRA’s Stovall.

The S&P 500 added 38.94 points to 2,836.74. The Dow Jones Industrial Average rose 260.01, or 1.1 per cent, to 23,775.25, and the Nasdaq composite added 139.77, or 1.7 per cent, to 8,634.52.

Gains for big tech stocks led the way. Tech makes up an outsized portion of the S&P 500 following years of market dominance. And because changes in market value dictate the index’s moves, the performance of the biggest stocks can have a disproportionate effect.

Stocks have been generally rallying since late March on promises for massive aid from Congress and the Federal Reserve, along with more recent hopes that parts of the economy may be close to reopening. In Georgia, some businesses began welcoming back customers on Friday after the governor eased a monthlong shutdown.

But many professional investors have been skeptical of the market’s recent rally. They say there’s still too much uncertainty about how long the recession will last and that attempts to reopen the economy could trigger more waves of infections if they’re premature.

In a demonstration of how hungry the market is for a vaccine or treatment for COVID-19, the S&P 500 erased a rally of more than one per cent in a span of seconds on Thursday following a discouraging report about a potential drug treatment. The Financial Times said a Chinese study of the drug found no positive effect, citing data published accidentally by the World Health Organization, though the company behind the drug said the data represented “inappropriate characterisations” of the study.

Through all the volatility, many investors saving for retirement have been holding steady.

They’re calling in for advice much more often, but the majority of savers with 401(k) accounts at Fidelity did not pull back on their contributions during the quarter.

The S&P 500 is down 16.2 per cent from its record in February, though it’s more than halved its loss since late March.

The price of a barrel of US oil to be delivered in June rose 2.7 per cent to settle at USD16.94.

It had sunk as low as USD6.50 earlier this week on worries that storage tanks are close to topping out amid a collapse in demand. Worries about extra oil with nowhere to go sent prices in one corner of the US oil market below zero on Monday.