The stock exchange in Frankfurt, Germany REUTERS/Staff
Stocks surged Monday amid signs that the coronavirus crisis is easing in some hard-hit places even as US officials warned of a brutal week ahead.
The Dow Jones industrial average jumped as many as 1,082.97 points, or a5.1 bout 4.4 percent, in early trading as the number of virus fatalities appeared to slow in Italy, France, Spain and New York, which reported a day-to-day drop in deaths on Sunday. The blue-chip index tumbled 360 points Friday to close last week in the red.
The S&P 500 and the Nasdaq Composite rose as much as 4.9 and 4.6 percent, respectively, after the opening bell as hopes of the pandemic abating lifted European and Asian stocks.
But the jump could be short-lived given that the worst has yet to come in the US, the global epicenter of the outbreak.
President Trump said over the weekend to expect “a lot of death” in the next two weeks as the apex of the crisis approaches.
“Investors are keen for the market to have bottomed but I’m not sure they’ll easily weather the storm to come and their nerves will likely be heavily tested,” OANDA senior currency analyst Craig Erlam wrote in a commentary.
The rally in stocks came alongside a drop in oil prices after Russia and Saudi Arabia postponed a planned meeting about a deal to reduce oil production from Monday to Thursday.
West Texas Intermediate crude futures were down 4.5 percent at $27.06 a barrel as of 9:18 a.m. Prices skyrocketed last week on hopes of an end to Russia and Saudi Arabia’s price war.
Investors have had to grapple in recent weeks with increasingly bad news about the coronavirus’s impact on the economy, such as record spikes in US jobless claims at the end of March. The markets will likely remain turbulent as lockdown measures meant to stem the spread of the virus keep the economy essentially shut down, according to experts.
“The stock market is likely to be volatile in the coming weeks as economic data portray an economy in full collapse, which will not improve until the switch is turned from ‘off’ to ‘on’ again,” Jim Paulsen, chief investment strategist at the Leuthold Group, wrote in a Monday note.
But hedge-fund billionaire Bill Ackman shifted his outlook on the crisis Sunday, saying he was “beginning to get optimistic” less than three weeks after pleading Trump to shut down the economy. He cited signs that the virus is peaking in New York and progress toward treatments.
“While it is hard to be positive when we know that tens of thousands more will die and many more will get severely sick, I have no choice but to be more optimistic about the intermediate future based on the data and facts I have seen recently,” Ackman said on Twitter.
But commenters raised eyebrows at Ackman’s change in tone following revelations that he recently made $2.6 billion from betting against the pandemic-battered markets.
“Is this because you’ve gone long now?” one Twitter user wrote in response to the Pershing Square Capital founder.