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Stock Market News for Mar 20, 2020

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U.S. stock markets closed higher on Thursday buoyed by strong performance by large-cap tech stocks after sharp losses recorded in the previous day. Massive stimulus injected by several major central banks enhanced investors’ confidence to some extent. Meanwhile, crude oil prices rebounded after finishing at its lowest level since 2002 in the previous day. All three major stock indexes ended in the green.

The Dow Jones Industrial Average (DJI) gained 1% or 188.27 points to close at 20,081.19. The S&P 500 rose 0.5% to close at 2,409.39. Meanwhile, the Nasdaq Composite Index closed at 7,150.58, increasing 2.3% or 160.73 points. A total of 17.08 billion shares were traded Thursday, higher than the last 20-session average of 15 billion. The CBOE VIX decreased 5.8% to close at 72. Advancers outnumbered decliners on the NYSE 2.64-to-1 ratio. On Nasdaq, 3.21-to-1 ratio favored advancing issues.  

How Did The Benchmarks Perform?

The Dow closed in positive territory with 18 components of the total 30 components of the blue-chip index closed in the green while 12 finished in red. The benchmark S&P 500 ended in the green with seven of its 11 sectors posted gains while four recoded losses. The Energy Select Sector SPDR (XLE) surged 6.8% while theUtilities Select Sector SPDR (XLU) tumbled 5.8%.

Meanwhile, the tech-laden Nasdaq Composite finished in the green driven by strong performance of large-cap tech stocks. Shares of Netflix Inc. (NFLX - Free Report) and Facebook Inc. (FB - Free Report) climbed 5.3% and 4.2%, respectively. Netflix carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Central Banks Inject Massive Stimulus

The Bank of England reduced its bank rate by 15 basis points to 0.1%. The central bank of the UK further increased its holdings of its government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion.

The European Central Banks has announced to purchase $820 billion of government and private sector bonds as well as commercial paper by year end. This measure will keep borrowing costs down to support the outlook for Europe’s economy and will ensure the central bank’s low benchmark rates will pass to businesses and consumers.

On Mar 15, in an unprecedented move, the Fed cut the benchmark lending rate by 1% point to a range of 0-0.25% from 1-1.25%. Notably, on Mar 3, the central bank cut the Fed fund rate by 50 basis points. This means, within two-weeks, the Fed cut interest rate by 1.5% as an emergency monetary stimulus. Moreover, the Fed has initiated a massive $700 billion quantitative easing program to inject liquidity in the system. Last week, the Fed has announced to unveil $1.5 trillion repo program to stabilize market mayhem.

Crude Oil Price Skyrockets

On Mar 19, the U.S. benchmark, West Texas Intermediate (WTI) crude jumped 23.8% or $4.85 to settle at $25.22 per barrel. This marked WTI’s biggest single-day gain in history. International benchmark, Brent crude, soared 14.4%, or $3.59, to settle at $28.47 per barrel.

Notably, the coronavirus-led global lockdown significantly plunged the demand for crude oil whereas the decision of the OPEC and the Russia-led oil producing groups to raise production quota after a failed dialogue between those two groups resulted in surge in global crude oil supply. However, on Mar 19, President Donald Trump said the U.S. could intervene. Following his press conference, crude oil prices rebounded.

Economic Data  

The Department of Labor reported that initial jobless claims jumped to 281,000 for the week ended Mar 14, from 211,000 the week earlier. The consensus estimate was 223,000. This marked the highest number since Sep 2, 2017. The total number of people collecting unemployment benefits in the first week of March stood near at 1.7 million.

Stocks That Made Headline

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Parsley Energy Inc. (PE - Free Report) trimmed its 2020 capital spending to below $1 billion, indicating a 40% cutback from the midpoint of the past projected $1.6-$1.8 billion range. (Read More)

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