Wall Street rallied on Thursday as hopes for a truce in the price war between Saudi Arabia and Russia and a cut in oil output drove gains, taking some sting out of a shocking jump in Americans filing jobless claims due to coronavirus-led lockdowns.
At the closing bell, The Dow Jones Industrial Average was up 469.93 points, or 2.24 percent, at 21,413.44.
Stocks took off with the price of oil, which surged more than 30 percent immediately after President Donald Trump said he expects Saudi Arabia and Russia to back away from their price war.
It overshadowed a staggering rise in initial claims for unemployment benefits, which rose to 6.65 million in the latest week from an unrevised 3.3 million the previous week, the U.S. Labor Department said on Thursday.
Stocks bounced on Thursday as oil prices recovered on hopes of a Saudi-Russia deal to cut output
The jobless figure for last week is much higher than the previous record of 3.3 million reported for the previous week.
The number of Americans filing claims for unemployment benefits hit a record high for a second straight week, bringing the total claims since the start of the pandemic to a staggering 10 million.
‘I’m surprised the market is not reacting,’ said Priya Misra, head of global rates strategy at TD Securities.
‘This number is doubling last week’s. The bad data is being priced in. We know that a large part of the economy is shutting down, so maybe people just expected an outlandish number.’
Many employers are slashing their payrolls to try to stay afloat because their revenue has collapsed, especially at restaurants, hotels, gyms, movie theaters and other venues that depend on face-to-face interaction. Auto sales have sunk, and factories have closed.
The surging layoffs have led many economists to envision as many as 20 million lost jobs by the end of April. The unemployment rate could spike to as high as 15 percent this month, which would be the highest level since the Great Depression.
The number of Americans filing new claims for unemployment benefits last week has shot to a record 6.6 million, according to figures released by the Department of Labor on Thursday
New claims for unemployment benefits rose to 6.65 million in the latest week from the 3.3 million the previous week. It means that 10 million Americans have filed for unemployment in the two weeks that the coronavirus started rapidly spreading across the country
The New York Department of Labor building in Downtown Brooklyn. The coronavirus pandemic has led to lay-offs and a surge in unemployment claims
However, investors were cheered by the prospect of an end to the oil price war between Saudi Arabia and Russia.
Exxon Mobil Corp and Chevron Corp jumped more than 8 percent in midday trading, as crude prices surged after President Donald Trump said he expected the oil titans to reach an agreement to cope with plunging demand.
‘Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!’ Trump tweeted on Thursday.
A one-day view of the Dow shows the index rising after Trump’s tweet in choppy trading
The S&P 500 has lost about $8 trillion in market value since a mid-February record high as the outbreak spread deeper in the United States and Trump warned of more economic pain in the next two weeks as efforts to contain the virus crush business activity.
‘Until investors are able to put a price on the final cost of the economic impact from the virus pandemic, any predictions of where the bottom is for stocks will be deemed premature,’ said Raffi Boyadjian, senior investment analyst at XM in Cyprus.
Across the Atlantic, British Airways jumped 3 percent after reports it was in talks with its union about a plan to suspend around 32,000 staff, marking one of the industry’s most dramatic moves yet to survive the coronavirus impact.
Delta Airlines, United Airlines Holding and American Airlines, among the most battered U.S. stocks this year, rose about 5 percent.
Southwest Airlines Co jumped 3 percent as it said it intended to file an application with the U.S. Treasury department for aid related to the disruption caused by the health crisis.