U.S. stocks soared Thursday as the government came closer to approving a $2 trillion stimulus package to combat the coronavirus pandemic, capping a three-day rally that has pushed the Dow Jones Industrial Average into a bull market.
The Dow industrials finished the day up 1,351.62 points, or 6.4%, to 22552.17, launching the blue-chip index back into bull-market territory. The jump ends an 11-trading day bear market for the index—the shortest in history for the Dow—which reached its bear-market low three days ago.
The rapid plunge out of and then rise back into a bull market demonstrates how volatile U.S. stocks have become as the coronavirus pandemic ripples through the economy.
The Dow industrials are still down 21% for the year, despite climbing 21% in the past three days—the largest three-day percentage gain for the index since 1931.
A bull market is typically defined as a 20% gain from a recent low. The stock market isn’t a proxy for the economy, which remains battered by the pandemic.
The S&P 500 also ended the day higher, climbing 154.51 points, or 6.2% to 2630.07, helping the index to similarly reach its largest three-day percentage jump in nearly 87 years. The technology-heavy Nasdaq Composite jumped 413.24 points, or 5.6% to 7797.54. Both indexes are still far from returning to a bull market.
Investors had been jittery leading up to the release of the latest weekly jobless claims data. Futures tied to U.S. stocks had declined steeply earlier in the morning but pared their losses after it was announced that a record 3.28 million workers filed for unemployment benefits—five times the previous high.
But stocks opened higher and remained in the green for the entire session as some investors were already looking ahead to the likely passage of the largest fiscal stimulus package in the U.S. in recent memory.
The Senate on Wednesday approved the relief plan, which would provide direct payments to Americans and loans to large and small companies, among other measures. The House is expected to consider the bill Friday. If approved, it would head to President Trump.
“Investors believe data like today will make it more likely that the House will pass the stimulus bill,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co. “The deeper and the worse the numbers are in the near term, the more possibility there is for a [fiscal] response, which powers the rebound on the other side.”
Gains were broad Thursday with all 11 sectors of the S&P 500 finishing the day higher. Dow heavyweight
surged 14% on news that the stimulus package had set aside $17 billion for businesses deemed critical for national security, which many have interpreted to include Boeing, which is a defense contractor.