Read enough financial coverage about the COVID-19 outbreak, and there’s plenty, and one of the takeaways is apparent: China’s willingness to step up and support the world’s second-largest economy. It’s a point I’ve highlighted several times in this space over the past few weeks and one that’s relevant today because Beijing is a big reason why stocks in the U.S. rallied.
- The S&P 500 jumped 0.47%.
- The Dow Jones Industrial Average climbed 0.4%.
- The Nasdaq Composite surged 0.87%.
- Disney (NYSE:DIS), a Dow component that has been dragged lower by COVID-19 headlines, jumped about 1.6% today and was the leader in the blue-chip index.
Chinese policymakers know that they could face an economic crisis if the novel coronavirus doesn’t abate soon and analysts are already forecasting a massive slowdown in first-quarter GDP growth with estimates ranging anywhere from 1% to 3%, well below the 6% China is hoping for this year.
Here in the U.S., there was some decent data on the real estate front. Earlier today, the Commerce Department said housing starts declined by less than expected last month while permit applications jumped near a 13-year high. Perhaps surprisingly, shares of Home Depot (NYSE:HD) didn’t respond much to that news, as the stock traded slightly lower today.
By the end of the trading day, 14 of 30 Dow components were higher.
There has been a bit of break from Boeing (NYSE:BA) in this space recently, but the company was back in the spotlight today amid reports that the company found debris in the engines of some 737 Max jets that have been sitting in storage.
Boeing didn’t say how many planes had engine debris. Whether its 2 or 200 isn’t the issue. The issue is regulators will view this as a quality control concern, one that could hamper the company’s ability to get the 737 Max airborne again by the middle of this year.
Boeing is dealing with the issue by providing new checks and guidelines for employees to use when examining jets in storage. Time will tell if this enough to get the 737 Max back in the skies by July.
Relief For Oil
With oil prices settling at three-week highs, Exxon Mobil (NYSE:XOM) and rival Chevron (NYSE:CVX) were among the Dow winners today. Perhaps equally as important is that several exploration and production stocks — companies that are usually viewed as more volatile and riskier than Chevron and Exxon — recently boosted dividends.
That could allay concerns, particularly those pertaining to Exxon, that the two oil giants may not extend their long-running payout increase streaks this year.
There was some strength in financial names today, led by Goldman Sachs (NYSE:GS) and JPMorgan Chase (NYSE:JPM), the latter of which may have gotten a lift on news of some reshuffling in its investment banking division.
Recoveries have to start somewhere and this could be that start for the financial services sector, which has seen some of its bigger names crimped by low interest rates to start 2020.
Bottom Line on the Dow Jones Today
It’s hard to argue with Wednesday’s results, particularly with the Nasdaq-100 and S&P 500 indexes ascending to new records. Interestingly, the dollar and gold got in on the act, not to records, but with some notable upside.
Going forward, an obvious potential headwind is just how destructive the coronavirus has been to the Chinese economy. Global investors may be able to deal with a quarter of slack growth, but Beijing adjusts full-year forecasts too far below 6%, that will likely roil markets.
As of this writing, Todd Shriber did not own any of the aforementioned securities. He has been an InvestorPlace contributor since 2014.