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Business

Stock market rallies for third straight day despite grim jobs report

By
Noah Manskar
Published March 26, 2020
Updated March 26, 2020, 5:37 p.m. ET

US stocks rallied for a third straight day Thursday as Wall Street shook off news that the coronavirus pandemic has put millions of Americans out of work.

The Dow Jones industrial average jumped 1,351.62 points, or , even after the US Labor Department said more than 3.2 million people filed for unemployment benefits last week.

The surge — which launched a new bull market for the Dow after an 11-day drop, its shortest in history — came after the blue-chip index staged its first back-to-back rallies on Tuesday and Wednesday as Congress and the White House agreed on a $2 trillion stimulus bill.

The S&P 500 and the Nasdaq climbed 6.2 and 5.6 percent, respectively, building gains from Tuesday and Wednesday fueled by optimism about the giant fiscal stimulus package, which will hand out checks to millions of Americans and rescue cash-strapped industries ranging from airlines to hotels and restaurants.

While the weekly jobless claims report shattered the record of 695,000 set in 1982, it didn’t appear to shock investors who had long anticipated that the pandemic would wreak havoc on the labor market.

“This stock market has fallen about seven times faster than any other bear market in postwar history, and that tells me there’s a lot of bad news already discounted,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “It’s got to get worse than what’s already in there, and there’s a lot of bad stuff in there.”

Jobless claims spiked more than most expectations, but not as much as some analysts feared. Citigroup reportedly predicted 4 million claims, while economists surveyed by Reuters largely expected 1 million.

The numbers aren’t likely to improve in the near future as the coronavirus keeps businesses shut across the country. Some economists expect the US unemployment rate to reach or surpass 10 percent, its peak during the Great Recession of a decade ago.

“Unfortunately, we do expect more numbers like this in the coming months,” Burt White, chief investment officer at LPL Financial, said in a commentary. “At the same time, markets are forward looking and will be more focused on how quickly we might be able to get to the other side.”

Thursday’s rally came as the House of Representatives took up the massive spending package that promises to cut checks to workers and provide support for virus-battered businesses. Hopes for a spending package this week led the Dow to post two consecutive days in the green for the first time since early February.

Wall Street held on to that hope Thursday as investors became convinced that the deal struck in Washington was big enough to get the country through the next couple months of the virus crisis, according to Jason Ader, CEO of SpringOwl Asset Management.

“Now you do have both sides of the aisle working together almost unanimously to get this done for the workers, for the American people,” Ader said. “I think everybody hopes we don’t need another [stimulus], but I think the market feels right now that if we do it’s very likely to happen.”