The S&P 500 index and Dow Jones Industrial Average closed out their best monthly performances in more than 30 years on Thursday even as the number of Americans who have applied for unemployment benefits reached more than 30 million and the coronavirus outbreak continued to devastate the broader U.S. economy.
While the S&P index fell just less than 1 percent on Thursday, it rose a total of 12.7 percent in April for its best one-month gain since 1987. The Dow Jones Industrial Average fell nearly 300 points Thursday, but also boasted its best month since 1987 with a 11-percent rise in April. The Nasdaq composite also surged more than 15 percent for its best month since 2000.
Stocks have steadily recovered from crashing more than 20 percent from late February through March as businesses across the U.S. closed to slow the spread of COVID-19 under orders from state and local governments, laying off millions of workers in the process.
The U.S. economy shrank by an annualized rate of 4.8 percent between January and March, according to Commerce Department data released Wednesday, and economists fear that the second-quarter drop could be as steep as 30 to 40 percent annualized.
Nearly 4 million Americans applied for unemployment benefits last week, according to data released by the Labor Department on Thursday, bringing the total number of jobless claims in April above 20 million and more than 30 million since mid-March.
Even so, Wall Street has rallied as President Trump nudges states toward loosening social distancing restrictions and governors move ahead with plans to allow some businesses to reopen, even in states where COVID-19 cases continue to increase.
“A lot of this likely reflects what appears to be a pretty solid floor put under the market by the kind of fiscal and monetary policy response not seen in any previous crisis,” wrote JJ Kinahan, chief market strategist at TD Ameritrade, in a Thursday research note.
“Congress and the [Federal Reserve] arguably deserve a lot of the credit for this incredible turnaround. Hopes for a virus treatment also play into the April optimism,” he continued.
Trump, Congress and the Fed have deployed trillions in direct aid, emergency loans and — in the central bank’s case — asset purchases to stimulate and stabilize the U.S. economy. Despite partisan battles over the aspects of rescue aid, there has been broad bipartisan agreement across the federal government over the need to spend extensively to protect the economy.
As Congress mulls the next coronavirus relief package, Fed Chairman Jerome Powell urged lawmakers Wednesday to spend as much as necessary to ensure the economy can rebound once COVID-19 is under control and set aside concerns about the rising national debt.
“This is the time to use the great fiscal power of the United States to do what we can to support the economy and try to get through this with as little damage to the longer-run productive capacity of the economy as possible,” Powell said during a Wednesday press conference.
The next day, Speaker Nancy Pelosi (D-Calif.) said that Democrats will push for including almost $1 trillion in the next coronavirus relief package to help states and local governments hit hard by the pandemic.