From Market Insider
US stocks climbed on Monday as economic-reopening plans around the world fueled fresh investor optimism.
All three major indexes climbed for a second straight day after states including Alaska, South Carolina, Georgia, and Texas began the first phases of business reopenings. The Dow Jones industrial average rose for a fourth consecutive session.
New York Gov. Andrew Cuomo on Sunday revealed the state’s plan for a gradual recovery, adding that the outbreak in the US’s virus hotspot had mostly been contained.
“Short term, the numbers are on the decline. Everything we have done is working,” Cuomo said, though he cautioned that people shouldn’t be “getting too far ahead of ourselves.”
Here’s where major US indexes stood at the 4 p.m. ET market close on Monday:
- S&P 500: 2,878.48, up 1.5%
- Dow Jones industrial average: 24,133.78, up 1.5% (359 points)
- Nasdaq composite: 8,730.16, up 1.1%
Spain, Italy, and France all made early moves to reboot their economies after data showed coronavirus deaths slowing further in the eurozone.
Still, even if reopenings kick off at the end of spring, a full economic recovery could take four years, Scott Minerd, the chief investment officer of Guggenheim Investments, said in a Sunday note.
The government and the Federal Reserve’s relief policies will emerge “insufficient, misdirected, and full of unintended consequences,” he said, forecasting an L-shaped trend for the nation’s gross domestic product.
“The Fed and Treasury have essentially created a new moral hazard by socializing credit risk,” Minerd wrote. “The United States will never be able to return to free market capitalism as we knew it before these policies were put in place.”
Positive stock sentiment did little to buoy the ailing oil market. West Texas Intermediate crude contracts slipped as much as 30%, to $11.88 per barrel, slammed by growing fears of a global storage crisis. US firms have already slowed drilling activity to prop up the market, while Saudi Arabia accelerated production cuts originally intended for May 1. WTI rose to $15.54 as markets closed.
Brent crude tumbled 11%, to $19.11 per barrel at intraday lows.
The commodity-market volatility could last several more weeks, Goldman Sachs said in a Friday note. The bank’s analysts see global oil storage hitting its limit in as little as three weeks. Stabilizing the market would require cutting worldwide production by 18 million barrels per day by mid-May, nearly double what OPEC+ agreed to cut at an April meeting, the team added.
The rest of the week is poised to deliver a range of macroeconomic-data releases and economic-policy updates. The Fed, the European Central Bank, and the Bank of Japan are all scheduled to hold monetary-policy meetings and issue updates on plans to further fight the coronavirus pandemic’s economic fallout.