Energy stocks propelled the broader stock market higher Thursday, driven by a surge in crude prices on hopes that Saudi Arabia and Russia could step back from their price war.
The Dow Jones industrial average jumped 300 points, a day after the blue-chip index shed nearly 1,000 points at the start of a new quarter. The Standard & Poor’s 500 jumped 1.5%, led by gains in the energy sector. Shares of Exxon Mobil and Chevron gained 10% and 11%, respectively.
Crude, which is coming off of its worst quarter ever, soared more than 25% Thursday after President Donald Trump said he was confident that Saudi Arabia and Russia would resolve their dispute over oil output and prices in the coming days. Trump told CNBC Thursday that he expects both countries to cut production by about 10 million barrels.
The gains come despite more people applying for unemployment insurance as segments of the economy are shutting down in the wake of the outbreak.
The number of Americans who filed claims for unemployment benefits surged to a record 6.6 million last week, the Labor Department reported Thursday, as the coronavirus pandemic caused massive layoffs and furloughs across the nation. That was double the prior week’s total of nearly 3.3 million.
Investors will monitor monthly jobs data, due Friday, for further indications on how the pandemic has affected the U.S. economy.
“This is eye watering and we are still only at the beginning of the layoffs spurred by the lockdowns throughout the country,” James McCann, senior global economist at Aberdeen Standard Investments, said in a note. “When we look at all the jobs at direct risk from social distancing policies, and those which could be affected indirectly, the numbers start to get pretty scary. Unemployment could well rocket in coming months to more than 10%, comfortably a post-war record.”
The S&P 500 index is coming off its worst quarter since the financial crisis in 2008, with a 20% loss. Traders say markets will be turbulent until numbers of new cases decline. The number of infections is rising despite anti-disease controls that have shut down much of the global economy.
The U.S. death toll was at 5,138 early Thursday, according to the Johns Hopkins University data dashboard. Worldwide, the virus has killed more than 47,200 and infected nearly 940,000.
Bank of America Global Research revised its economic projections for the year. Analysts at the firm forecast three consecutive quarters of contraction, with the U.S. economy shrinking 7% in the first quarter, 30% in the second quarter and 1% in the third quarter. The bank projects growth will recover in the final three months of the year.
“This degree of weakening in the economy should translate to a significant amount of job cuts which will happen over the next two months,” analysts at Bank of America Global Research, said in a note. “We think that between 16 and 20 million jobs could be lost, sending the unemployment rate to a peak of 15.6%.”
Last week, Congress enacted a $2.2 trillion economic aid package and the Federal Reserve promised to buy as many Treasurys as needed to keep credit markets running smoothly.
Legislators are collecting ideas for a possible new round of aid. President Donald Trump tweeted his support for a $2 trillion infrastructure package. But top Republicans in Congress say they first want to see how well their newly approved programs do.
In Europe, the FTSE 100 in London gained 0.8% and Frankfurt’s DAX added 0.2%. The CAC 40 in France advanced 0.5%. In Asia, the Shanghai Composite Index gained to 2,780.64 and Hong Kong’s Hang Seng added 0.8% to 23,280.06. Tokyo’s Nikkei 225 declined to 17,818.72.
Contributing: The Associated Press