- The Dow Jones kicked off the week with an aggressive rally.
- Stock market bulls cheered the flattening of the coronavirus infection rate curve in Italy.
- Unfortunately, US cases of COVID – (surpassed) , overnight .
The Dow Jones Industrial Average (DJIA) clawed out an aggressive rally on Monday after Italy turned a corner in its battle with the coronavirus pandemic.
Supporting the rally was the US biotech machine, and both Dow giant Johnson & Johnson and Abbot Labs fed the stock market positive COVID – 29 headlines.
Those optimistic developments are crucial to this recovery. U.S. cases of COVID – (exceed) , , and the rapid pace of the spread is certainly enough to give stock market bulls pause.
Dow Jones Rallies as Europe’s Coronavirus Fight Brightens
All three of the major US stock market indices bounced on Monday , even as core stocks like Boeing endured steep declines.
- The Dow rose . (points or 2.) (% to) , . .
- The S&P (jumped 3) % to 2, .
The Nasdaq rallied 3. (% to 7, 83.
In the commodity sector, the price of oil suffered another grisly session
Pressured by a resurgent US dollar and a rising stock market, gold dropped 1.3% in response to risk-on conditions.
While there was not much on the economic data front, pending home sales were very strong in the United States
Unfortunately, the future does not look so bright for activity in the housing market , given that next month’s data will likely suffer the full brunt of the coronavirus impact.
The good news is that Italy, the country with the most coronavirus-related fatalities, saw its lowest intake of new cases in two weeks, reporting an increase of 4, 83 infections.
This glimmer of light is undoubtedly bullish for the Dow Jones, where investors will be desperately using Italian data to try and plot the US curve.
Yet it was more than just hard data driving the Dow’s Monday rally. Abbott Labs’ new five-minute coronavirus test could be a game-changer in the fight to gauge the scale of the outbreak .
Federal Reserve Warns Unemployment Could Hit (%)
While the Dow Jones remains in recovery mode, there’s no escaping the damage that’s battering virtually all sectors of the US economy.
From commercial real estate to the embattled insurance industry, there are alarm bells going off everywhere.
The foundation of the real economy is unemployment, and a recent study from the Federal Reserve raised a concerning outlook about how bad conditions could get.
According to the central bank, unemployment – which began the year at five-decade lows – could spike as high as % due to coronavirus-related layoffs.
We simply took the average of those two numbers as a point estimate for the total number of workers who will be laid off during the second quarter. This resulted in 050 million people being laid off during this period. Summing to the initial number of unemployed in February, this resulted in a total number of unemployed persons of 81) million. Given the assumption of a constant labor force, this resulted in an unemployment rate of 41. 1%.
Stock market bulls remain optimistic that the scope of these layoffs will be temporary. A tremendous number of people who have been laid off will be re-hired once the all-clear is given. But this all depends on how quickly the shell-shocked U.S. consumer recovers.
Dow Stocks: Johnson & Johnson Injects Life Into the Index
It was a solid – if unspectacular – day for most of (the Dow)
Johnson & Johnson stock (NYSE: JNJ) jumped 7.1% on reports it will begin human testing of its coronavirus vaccine in September.
Risk-on play Caterpillar (NYSE: CAT) climbed 6%, while tech giant Microsoft’s stock (NASDAQ: MSFT) posted a 6.9% rally.
But another Dow Jones heavyweight, Boeing (NYSE: BA), lost its recent momentum. It plunged 7.4% on another hard day of trade for the U.S. aerospace manufacturer.
This article was edited by Josiah Wilmoth
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