Wall Street rises on Fed’s $2.3 trillion backstop

(C) Reuters. A man crosses a nearly deserted Nassau street in front of the New York Stock Exchange (NYSE) in the financial district of lower Manhattan in New York

By Chuck Mikolajczak

NEW YORK (Reuters) – Wall Street rose for the third time in four days on Thursday as the U.S. Federal Reserve unleashed its latest program designed to buttress local governments and businesses crushed by moves to slow the coronavirus outbreak.

In the $2.3 trillion package, the Fed said it would work with banks to offer four-year loans to companies of up to 10,000 employees and directly buy bonds of states and more populous counties and cities.

“It was unexpected and it has definitely given a shot in the arm not only to the overall equity market but also the high yield market,” said Sal Bruno, chief investment officer at IndexIQ in New York.

The financial index was up 4.11%, providing the biggest boost to the S&P 500, as banks rose sharply on the Fed’s backstop. J.P. Morgan rose over 7.50%, leading gains on the Dow. Shares of iBoxx High Yield Corporate Bond Fund climbed 5.92%.

That helped take the sting out of another tough report on the labor market, with weekly initial jobless claims topping the 6 million mark for a second straight week.

The defensive real estate and utilities sectors also rose more than 4%.

The Dow Jones Industrial Average rose 191.56 points, or 0.82%, to 23,625.13, the S&P 500 gained 25.36 points, or 0.92%, to 2,775.34 and the Nasdaq Composite added 11.85 points, or 0.15%, to 8,102.75.

The S&P 500 has gained more than 12% in the holiday-shortened week on early signs of the outbreak hitting a peak and aggressive global stimulus, on track for its best weekly performance since 1974. The Dow, up nearly 13%, was poised for its biggest weekly percentage gain since 1938.

If gains hold through the day, the benchmark index would have logged its best week since October 1974.

While public health experts stressed the need to keep people apart to contain the contagion, the restrictions have strangled the economy and sparked widespread production cuts, layoffs and projections of a severe recession.

In a sign that the disease’s curve was flattening in New York, the epicenter of the U.S. outbreak, New York Governor Andrew Cuomo said new hospitalizations fell to a fresh low of 200, although deaths spiked to another new high.

Major averages were well off their earlier highs, however, as oil prices reversed course and turned lower as OPEC and its allies held talks about production cuts, sending the energy sector down 3.63%.

“The fact they are at the table, virtually talking, is a decent sign, probably not a great sign, but a decent sign,” said Bruno.

Walt Disney (NYSE:DIS) Co jumped 3.57%, as the company said its Disney+ streaming service had attracted more than 50 million paid users globally.

Advancing issues outnumbered declining ones on the NYSE by a 5.30-to-1 ratio; on Nasdaq, a 2.88-to-1 ratio favored advancers.

The S&P 500 posted 5 new 52-week highs and no new lows; the Nasdaq Composite recorded 14 new highs and 8 new lows.