While equities sold off Sunday in the overnight session as investors’ worries over a rapidly advancing coronavirus took center stage, stocks are climbing higher on Monday, reigniting on a healthy rally from last week as the U.S. extends measures to control the coronavirus outbreak.
While he was initially targeting Easter as the time to begin slackening social distancing guidelines and planning to open up the country once again, President Trump announced at a news conference Sunday the national social distancing guidelines have been extended to April 30, noting that mortalities from the virus would reach a zenith in two weeks. These measures may generate a stiff economic disruption in the near term but are understood by some investors as beneficial to avoid long-term destruction to the already fragile economy.
“Nothing would be worse than declaring victory before the victory is won. That would be the greatest loss of all,” Trump said. “The better you do, the faster this whole nightmare will end. Therefore, we will be extending our guidelines to April 30, to slow the spread.”
Stock index ETFs are also moving higher on Monday, with the SPDR S&P 500 ETF Trust (SPY) rallying 2.5%, the SPDR Dow Jones Industrial Average ETF (DIA) climbing 2.25%, and the Invesco QQQ Trust (QQQ) up 3.11%.
Trump justified his new approach, saying he asked both doctors what would happen “if we did nothing, just rode it out.”
“I think we got our most accurate study today or certainly most comprehensive,” the president said. “Think of the number, potentially 2.2 million people [would die]if we did nothing if we didn’t do the distancing if we didn’t do all the things we’re doing.”
Last week the Dow Jones Industrial Average notched its heftiest weekly gain since 1938, surging more than 12%. The S&P 500 and Nasdaq are finishing off their best week since 2009, after climbing 10.3% and 9.1%, respectively. Volatility has compressed considerably, but is still well above normal levels, creating wide swings for investors and traders as they attempt to navigate these tricky markets.
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