People walk by the New York Stock Exchange (NYSE) on March 09, 2020 in New York City.
Spencer Platt | Getty Images
U.S. stock futures were relatively flat on Thursday night following a sharp rally sparked by increasing expectations of massive fiscal stimulus while investors shook off grim unemployment data.
Dow Jones Industrial Average futures traded just 21 points higher, or about 0.1%. S&P 500 and Nasdaq 100 futures hovered around the flatline. Dow futures briefly traded more than 100 points higher shortly after the 6 p.m. open.
The Dow rallied more than 1,300 earlier on Thursday, or 6.4%, to cap off its biggest three-day gain since 1931. The 30-stock average is now up more than 20% over the past three sessions. The S&P 500 also rallied more than 6% and is now up over 20% since Monday’s close as well.
Stocks got a boost after the Senate passed a $2 trillion economic stimulus bill aimed at mitigating the economic damage from the coronavirus outbreak. House speaker Nancy Pelosi, D-Calif., said the bill will be passed “with strong bipartisan support.” The House is expected to vote on the bill Friday.
Comments from Federal Reserve Chairman Jerome Powell also gave stocks a boost Thursday.
“We still have policy room in other dimensions to support the economy,” Powell said on NBC’s “TODAY” show. “We’re trying to create a bridge from a very strong economy to another place of economic strength.”
A massive spike in weekly jobless claims could not halt the market’s blistering run higher on Thursday. The Labor Department reported that jobless benefit claims had soared to 3.28 million last week, easily eclipsing the previous record of 695,000.
Thursday’s rally put the Dow and S&P 500 on pace for their best weekly performances since the 1930s. However, some traders worry about the sustainability of this surge.
“Even though equities were squeezed higher into the close, credit markets continue to diverge substantially,” said Ken Berman, strategist at Gorilla Trades. “You could almost smell the burning shorts on Wall Street [Thursday], but as credit spreads remain wide, one has to wonder how much ‘real’ buying is behind this week moves, besides the bailout-induced short-covering.”
Gregory Faranello, head of U.S. rates trading at AmeriVet Securities, said he’s taking the surge in equities with a grain of salt.
“I wouldn’t necessarily take the price action in the risk markets right now to be a true reflection that this is over,” he said. “This is going to be an economic fallout. We’re seeing in two weeks what we would normally see maybe in a year and a half or two years.”
The number of global coronavirus cases have risen to more than 510,000, according to data from Johns Hopkins University. In the U.S. alone, more than 75,000 cases have been confirmed.
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