MANHATTAN (CN) — Investors hoping the market reached its bottom last week inched forward Monday morning following dire warnings from federal health officials about coronavirus.
On Sunday, the administration’s leading infectious-disease expert warned that up to 200,000 Americans could die from Covid-19. The news prompted the president to extend social-distancing guidelines through April.
Futures hinted at a positive opening, and a few minutes after the opening bell the Dow Jones Industrial Average rose 1%. The S&P 500 and Nasdaq initially outpaced the Dow, each rising nearly 1.5% in the first few minutes of trading.
The slight increase builds on last week’s historic market, one of the best since the 1930s, which may indicate most of the “bad news” regarding coronavirus has already been baked into investors’ calculations.
Last week’s bad news included an unbelievable spike in unemployment claims, as well as the United States taking the lead in the total number of coronavirus cases.
Investors are pinning hopes that the market hit its bottom last Monday, when the Dow closed at 18,591 points, and that the $2.2 trillion stimulus package signed into law by President Trump will mitigate the economic damage from the pandemic.
Some investors, however, believe further carnage is on the horizon. In an investor note, UBS warned that “because infection rates are likely to keep rising for some time, and also because in cash equity markets we have not yet seen a capitulation in the core positions in growth style stocks, it may be early to say a firm bottom has already been made.”
Abroad, markets had a mixed day.
In Australia, where the government agreed to pay businesses 70% of the median wage to curtail unemployment, markets closed up a whopping 7%. Elsewhere in Asia, most markets fared relatively poorly, dropping 1-2%.
European markets also fell across the board as coronavirus-related deaths in Italy began leveling off over the weekend. The pan-European market Stoxx 600, which was down more than 2% earlier in the day, had fallen 0.6% by 8:30 a.m. E.S.T.
The increasingly dire predictions in the United States has prompted President Trump to back off his hopes to reopen the country by Easter.
During his daily press briefer Sunday, the president extended the social-distancing guidelines through April 30 due to the new estimates.
“It was just an aspiration,” Trump said of his initial Easter deadline. “Easter should be the peak number, and it should start coming down and hopefully very substantially from that point.”
The president said he will update those recommendations on Tuesday.
Markets are also likely shaken by the plummet in oil prices, which hit new lows Monday morning, as the West Texas Intermediate hit about $20 per barrel.
Oil companies have lamented the massive drop in demand brought about by social distancing, with some investors calling the current environment a “bloodbath.”
Cases of Covid-19, the new strain of coronavirus, have more than doubled in the last week, according to data compiled by Johns Hopkins University. The virus has affected more than 735,000 and killed more than 34,000 worldwide.
Last Thursday, the United States surpassed Italy and China to take the lead in the number of Covid-19 cases. About 143,000 have been infected by the virus in the United States, while 2,500 have died.