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Coronavirus: Stock markets rally for 3rd straight day despite U.S. jobless numbers

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Canada’s main stock index has made back about a third of its recent losses with the first three-day rally since hitting a record high in February.

The S&P/TSX composite index closed 243.94 points or 1.8 per cent higher at 13,371.17. That’s up 19 per cent since Monday’s close but still nearly 26 per cent below last month’s peak.

In New York, the Dow Jones industrial average was up 1,351.62 points or 6.4 per cent at 22,552.17 for the best three-day run since 1931. The S&P 500 index was up 154.51 points or 6.2 per cent at 2,630.07, while the Nasdaq composite was up 413.24 points at 7,797.54.

READ MORE: Number of Americans filing jobless claims spikes to a record 3.28 million

Thursday’s gains came despite nearly 3.3 million Americans applying last week for unemployment benefit claims as the impact of measures to contain the spread of the COVID-19 pandemic take hold.

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“I’m a bit surprised at how strong the move has been today, just given it’s the biggest claims number we’ve ever seen,” said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.

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He said there were some forecasts that the number would be as much as five million and is likely to get higher.

Archibald said it’s difficult to know if market gains spurred on by large rescue packages in the U.S. and Canada are the start of a sustained rally.

The markets still have some room to grow if past bear market rallies are any guide, before dipping again and settling out, he said.

“You could still potentially see another 10 to 15 per cent up move here to get back to about half the losses that you experienced, and that would be about average compared to previous bear markets,” he said.

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The Canadian dollar gained more than one cent to trade for 71.04 cents US compared with an average of 69.92 cents US on Wednesday.

Nine of the 11 major sectors on the TSX were higher, led by health care, industrials, utilities and technology.

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Cannabis company Hexo Corp. saw its shares surge almost 35 per cent, followed by Aurora Cannabis Inc. at 19 per cent.

Bus maker New Flyer Industries Inc. gained 33 per cent to help industrials while Lightspeed POS Inc. was up 32 per cent.

The heavyweight financials sectors was up another 1.7 per cent with Industrial Alliance Insurance and Financial Services Inc. and Home Capital Group Inc. gaining 10.6 and 10 per cent respectively.

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The key energy and materials sectors were both lower on the day.

Energy sank 1.7 per cent with Baytex Energy Corp. dropping 8.1 per cent on lower crude oil prices.

The May crude contract was down US$1.89 or 7.7 per cent at US$22.60 per barrel and the May natural gas contract was down 2.5 cents at US$1.69 mmBTU.

Archibald said the decrease in crude stemmed from dashed hopes that U.S. President Donald Trump would get Saudi Arabia and Russia to agree during a virtual G20 meeting to cut production and that the U.S. would buy more crude for its strategic petroleum reserve.

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Materials slipped slightly despite higher gold prices.

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The April gold contract was up US$17.80 at US$1,651.20 an ounce and the May copper contract was down 2.6 cents at US$2.18 a pound.

Markets will continue to be volatile until the growth of novel coronavirus cases globally and in the U.S. plateau, he said.

READ MORE: What will happen to Canada’s housing market amid the pandemic?

“If you use the playbook from other parts of the world, we should start to see that peak, you know, sometime in the next couple of weeks,” said Archibald, adding that a steeper U.S. infection curve will dampen sentiment.

“To the extent that the data is bad and the caseloads continue to move up, it’s going to be awful difficult for the stock market to continue to rise significantly more from here.”