As Coronavirus dominates the headlines and everyday life in America, the stock market offered some hope for investors.
While the worst is likely far from over, moderate intra-day gains on Thursday proved that there’s still life and plenty of activity in stocks. All major U.S. indexes closed in the green, even as U.S. futures fell.
The activity is being driven by government stimulus packages and the promise of careful fiscal management and support during what will be one of the most trying times for the global economy since the great depression.
Stock Market Volatility and Fresh Gains for Stocks
Indexes bounced up and down on Thursday but finished the day with moderate gains over Wednesday’s sweeping losses.
- The Dow Jones Industrial Average (DJIA) was up 1% at the close of trading.
- The S&P 500 (SPX) was up 0.5%.
- The heavily tech-based NASDAQ Composite (COMP) was up 2.3%.
Key developments injected some confidence into the markets. The Federal Reserve announced on Thursday morning that it would open dollar swap lines with other central banks to facilitate the trading of the U.S. dollar, which is currently in high demand worldwide. This follow’s the Fed’s previous cut of the official money rate to 0.0% percent. The Fed also announced this week that it would issue a Money Market Mutual Fund Liquidity Facility.
The Bank of England said on Thursday that it would cut its official rate to 0.1% to aid markets in the U.K. It will also increase bond-buying to stimulate markets.
The European Union is also planning sweeping stimulus measures that could total more than $800 billion in relief for European markets.
All of these initiatives are intended to prevent a widespread global economic crash. Unemployment is likely to rise as nations shut down parts of their economies.
Both gold and oil futures rose on Thursday, indicating that these are potential safe havens for investors during the ongoing public health and financial crisis.
It’s Time to Start Considering Long Term Stock Picks
While many investors won’t be interested in buying during this volatility, it could be the ideal time to plan portfolios and potential stock picks. Many of the best growth stocks are currently undervalued, and there is a likely upside for stocks that have fundamental strength, especially in areas like technology, energy, and healthcare.
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