Stocks ended a volatile session Thursday with solid gains as investors cheered regulation rollbacks for the big banks.
The Federal Deposit Insurance Commission said it would allow banks to more easily make large investments into funds such as venture capital funds. Also, banks will not have to set aside cash for derivatives traders between different affiliates of the same firm, potentially freeing up more capital.
"When we think about a recession of the magnitude that we have, there's going to be some credit write-offs by banks," said Art Hogan, chief market strategist at National Securities. "The fact that they're going to have more working capital makes markets breath a sigh of relief."
Bank of America, JPMorgan Chase, Citigroup and Wells Fargo all rose more than 3%. Goldman Sachs also gained 4.6% while Morgan Stanley advanced 3.9%. Shares of the major banks jumped to their highs of the day in the final hour of trading as investors looked ahead to the Federal Reserve releasing stress-test results for the major banks. Those results are set for release after the close.
Stocks were lower earlier in the day as investors continued to fret over the rising number of coronavirus cases.
Florida reported on Thursday 5,004 additional coronavirus cases. That's slightly down from the state's single-day record of 5,508, which was reported Wednesday. In Arizona, cases jumped by 5.1%, topping the state's seven-day average of 2.3%. Meanwhile, Texas Gov. Greg Abbott said the state would pause its reopening plans given the recent spike in cases and hospitalizations.
This recent uptick comes after the U.S. suffered its single-biggest daily coronavirus cases surge on record. More than 45,000 new coronavirus cases were confirmed on Wednesday, a record that surpassed the previous April 26 peak by over 9,000 cases, according to an NBC News tally.
Wall Street was coming off its worst one-day performance since June 11, with the Dow, S&P 500 and Nasdaq all falling more than 2% on Wednesday.
"I think we're going to see a second wave of cases," said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. "That's my biggest worry about the market."
"At some point, you have to come back to fundamentals and if the funamentals haven't improved, all the stimulus-related increase in equity prices must be given back," said Kumar.
An additional 1.48 million Americans filed for unemployment benefits last week, the Labor Department said. Economists polled by Dow Jones expected a print of 1.35 million. This marks the second straight week that U.S. jobless claims data was worse than expected. However, continuing claims fell by more than 700,000 last week.
"No matter which way you look at it, over a million unemployed is a very bad thing," said Mike Loewengart, managing director of investment strategy at E-Trade. "It will take some time to unwind the structural damage COVID has caused across the world."
"While it's certainly uncomfortable, the everyday investor should be used to ongoing market volatility at this point," Loewengart said.
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