- Dow Jones Industrial Average closed higher by about 780 points, or 3.4%, at 23,434.
- The S&P 500 index ended up 3.4% at 2,750.
- The Nasdaq Composite Index closed 2.6% better-off to 8,091.
US benchmarks ended sharply higher on Wednesday, recovering from Tuesday vicious closing hour selloff. With signs of slowing numbers of COVID019 cases, there was fresh optimism that investors focused on whereby the US economy would be seen to bounce back should the lockdowns be tapered off as the US recovery from COVID-19.
Also, there was a recovery in the price of oil and oil-related stocks while investors get set for a major production cut among major crude producers on Thursday. Consequently, the Dow Jones Industrial Average closed higher by about 780 points, or 3.4%, at 23,434, the S&P 500 index ended up 3.4% at 2,750 and the Nasdaq Composite Index closed 2.6% better-off to 8,091.
As for the FOMC minutes, in short, there were no major new revelations, but the minutes provide some context for the additional measures that have been announced since March 15, although the market mostly ignored the minutes. More here: FOMC minutes: All participants viewed near-term economic outlook as having deteriorated sharply
Analysts at ANZ explained that strong COVID-19 containment measures are working.
Key comments
- “Some badly affected European countries appear to have reached or may soon reach peaks in new cases, though in some other countries things will keep getting worse before they get better. In New Zealand, progress is encouraging, with new case numbers showing a clear downward trajectory.
- Continued lockdown measures will be required for a while yet to ensure that these trends continue.
- But looking ahead, the focus turns to a possible exit strategy. It won’t be straightforward, and we are unlikely to see normality for quite some time.
- A gradual lifting is possible to test the risk of resurgence. Activity restrictions will likely be required for a while yet to keep the risk of a renewed outbreak contained. Strong border restrictions will certainly be needed and countries will likely be quite insulated for quite some time. Global trade will remain weak; the WTO has said world trade could contract by 32% this year.
- A weak domestic demand backdrop will weigh on GDP for a number of years, with the recovery expected to be very protracted.
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