Who let the bulls out? Dow closes 1,300 points higher

United States stock markets soared for a third straight session on Thursday, shattering another long-standing record as investor sentiment remained positive after the US Senate passed an historic $2 trillion stimulus package to offset the economic blow of COVID-19 containment measures.

The Dow Jones Industrial Average closed up 1,351.62 points or 6.4 percent to 22,552.17. Thursday’s surge marked the biggest three-day winning streak for the Dow since 1931, pulling the index up more than 20 percent from its Monday low – enough to place it back into bull market territory. But the 30-share index is still some 20 percent off its recent record highs. 

The broader S&P 500 index, a gauge for the health of US retirement and college savings accounts, gained 6.2 percent to also cap off a three-day winning streak, while the Nasdaq Composite Index closed 5.6 percent higher.

Wall Street investors were not thrown by historically bad jobless claims numbers released before the start of trading on Thursday.

More than three million Americans filed initial jobless claims for the week ending March 21, the US Bureau of Labor Statistics (BLS) said on Thursday. The tsunami of layoffs swamped the previous record of 695,000 newly jobless set in October of 1982.

“Nearly every state providing comments cited the COVID-19 virus impacts,” the BLS said in its release. “States continued to cite services industries broadly, particularly accommodation and food services.”

Other industries heavily cited by states as sources of newly unemployed workers include healthcare and social assistance, arts, entertainment and recreation, transportation and warehousing, and manufacturing.

Some economists warned that some of the job losses stemming from the coronavirus outbreak could endure long after the crisis has passed.

“We would be amazed if it [the US unemployment rate] didn’t exceed 10 percent by May, if not April,” Paul Ashworth, US chief economist at Capital Economics, wrote in a note to clients. “There will be a very significant drop back in unemployment when the number of new coronavirus infections fall and the economy begins to reopen, but it won’t reverse all of these losses. The unemployment rate could remain elevated for years.”

But investors choose to shrug off negative sentiment and focus instead on the Senate’s unanimous passage of a massive coronavirus relief package on Wednesday. The legislation now heads to the US House of Representatives for a vote on Friday. 

The bill contains a slew of measures to help industries, businesses and workers offset the sudden and deep financial hit as coronavirus containment measures have ground entire sectors of the US economy to a halt.

Federal Reserve chairman Jerome Powell tried to put the slowdown into perspective on Thursday, telling NBC News that the economy will likely pick up in the second half of the year. “We know that economic activity will decline probably substantially in the second quarter, but I think many expect and I would expect economic activity to resume and move back up in the second half of the year,” Powell said.