The Dow Jones enjoyed a strong bounce on Thursday, as bullish momentum outstripped yet another dire initial jobless claims figure.
Uncertainty remains the order of the day, but stock market bulls cling to Chinese data and vaccine hopes as reasons to be optimistic.
All three of the major U.S. stock market indices powered higher on Thursday, with the Dow Jones once again bringing up the rear.
The impressive rally in crude oil stagnated in later afternoon trading. After spiking as high as $26.74, front-month WTI futures fell back below $24 to post slight losses for the day.
And yet there was plenty of good news for oil bulls. Economic activity is slowly resuming in the U.S., while China’s latest trade data suggest its industrial sector is back up and running. Traders may take China’s “official” data with a pinch of salt, but it still sows seeds of hope for a dynamic rebound in the United States.
Elsewhere, Wall Street enjoyed more news of progress in the race to bring a coronavirus vaccine to market. For traders and algos alike, this is a vital fundamental to watch in the global fight against COVID-19.
But for the bears, there is still a tremendous amount to be concerned about. U.S. cases continue to rise, with global infections on a trajectory to hit 4 million over the next few weeks.
Against this backdrop, initial jobless claims continue to be a weird trigger for the U.S. stock market. The addition of another 3 million workers to the jobless rolls did little to inhibit a big surge in the Dow ahead of tomorrow’s likely-historic employment report.
Stock market investors are clearly behaving as though the economic damage was all priced in at the lows earlier in the year. It doesn’t hurt that futures markets are now anticipating the (slight) possibility of negative interest rates later in the year.
Despite the positive feelings on Wall Street, uncertainty could be a big source of opportunity for bears, as real estate billionaire Sam Zell outlined in a recent interview with Bloomberg TV.
Chris Beauchamp, chief market analyst at IG, further elucidated why all this uncertainty is a threat to the bullish narrative – especially as more investors succumb to FOMO.
Beauchamp wrote in a comment shared with CCN.com:
Warnings of terrible economic performance this year have been followed by predictions of a moderate rebound for next year, but as companies around the globe are discovering, it is almost futile to predict what the next few quarters will look like.
The end of lockdowns might bring a second wave, or they might not. A vaccine might arrive soon, or it might not. Whatever happens, the lasting economic damage will take years to repair, and from the look of corporate updates this morning, we are closer to the beginning than the end.
On a risk-on day in the Dow 30, it was Boeing that powered the index higher with an impressive 4.5% rally.
The strength may have originated from the news that one of its 737 MAX suppliers was starting work again. This, mixed with a better outlook for China, helped the stock continue its ascent.
Boeing was not the only Dow 30 member to enjoy the China rally, as Dow Inc. and Apple both moved higher.
Initially buoyed by the fleeting bounce in crude oil, super major Chevron enjoyed a 3% increase, while media giant Disney shrugged off its early-week struggles with an impressive 3.5% jump.