What were we worried about again? The stock market is certainly not falling, because it doesn’t seem to do so terribly often these days.
After falling 710 points on Wednesday, the Dow Jones Industrial Average rose 299.66 points, or 1.2%. while the S&P 500 gained 1.1% and the Nasdaq Composite advanced 1.1%.
No, the coronavirus was not cured and a vaccine was not developed. In fact, the coronavirus continued to spread, and jobless claims were disappointing. But after a bit of back and forth, the FDIC announced a relaxation of the Volcker rule, and went racing for the S&P 500, which was led by the financial sector, which hit 2.7%. Only one sector fell: poor public services, which have lost 14% in 2020.
“One of the catalysts today was the decision of regulators to relax the Volcker Rule which had drastically restricted banks from investing their own money or that of depositors in financial markets,” writes Stephen Todd of Todd Market Forecast. “Allowing investments from this source could be an important factor in future share prices.”
About it. At 4:30 pm, the Federal Reserve released the results of its stress tests, and investors did not like what they heard. No buybacks, dividend limits, and limited payouts for what a bank earns. SPDR S&P Bank (KBE) ETF is down 3.2% in after-hours trading, while JPMorgan Chase (JPM) shares are down 1.3%, Bank of America (BAC) is down a 1.3% and Wells Fargo (WFC) is down 3.5%. For some strange reason, Citigroup (C) has gained 0.6%.
Which will put pressure on technology again. It’s where investors turn when the world feels a little scary, but not scary enough to sell it all. She gained 1.3% on Thursday, and don’t be surprised if she has to do the heavy lifting on Friday. If not, Thursday’s earnings could quickly disappear.
“Today’s healthy rebound was slightly surprising after yesterday’s gloomy session, but volatility could still return,” writes Gorilla Trades strategist Ken Berman. “The battered banking sector provided unlikely leadership against COVID’s negative headlines, but we have to wait and see if today’s recovery was just a ‘one-day wonder’ or if the pullback has already ended.”
Write to Ben Levisohn at [email protected]