In a span of two weeks, close to 10 million Americans have filed for unemployment insurance. The number exceeds even the most dire forecasts. To give you some perspective, only 665,000 were unemployed during the height of the 2009 global financial crisis.
With such horrible figures, it could be expected that investor sentiment would turn extremely bearish.
Surprise, surprise — both the S&P 500 and Dow Jones Industrial Average were up by over 2% on Thursday. How did that happen? Guess what President Donald Trump was doing behind the curtains.
Equities made gains across the board with all 11 sectors finishing in the green. The rally was led by the energy group’s 9.1% surge. Shares of Chevron (CVX) and Exxon Mobil (XOM) were up by 110% and 7.6%, respectively.
The stock market pushed higher after Donald Trump tweeted that he expects Saudi Arabia and Russia to cut oil production by 10 million barrels.
Trump’s deal could resuscitate an oil industry reeling from the impact of the novel coronavirus and the price war between two feuding nations in Saudi Arabia and Russia. If only the conversation between the three heads of state actually took place.
President Trump has the tendency to make headline-grabbing announcements even before a deal is signed and sealed. He jumped the gun while negotiating the terms of the phase one deal with China. It appears that he may be doing it again.
A Kremlin spokesperson refuted Trump’s claim about a phone call between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman. The spokesperson also emphasized that the countries have yet to start energy discussions and there were no scheduled talks on Friday.
It’s possible that Mr. Trump once again created a deal out of the figment of his imagination or the Kremlin denials are incorrect. He probably hoped that news of an oil deal would push the 6.6 million unemployment claims to the background, and it did. Instead of another bloodbath, the energy sector spearheaded a stock market rally.
Now that investors know what Mr. Trump has been doing behind the curtains and it’s not clear if his claims are true, it’s quite possible that we’ll see another stock market rout.