Stocks alternated between gains and losses on Thursday as the number of coronavirus cases continues to rise while investors digested a regulation rollback for the big banks.
The Dow Jones Industrial Average traded 224 points higher in the final hour of trading, or 0.9%. Earlier in the session, the 30-stock Dow had traded down more than 200 points. The S&P 500 gained 0.8% and the Nasdaq Composite rose 0.7%.
The major averages hit 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.
Bank of America, JPMorgan Chase, Citigroup and Wells Fargo all rose more than 3%. Goldman Sachs also gained 3.9% while Morgan Stanley advanced 3.6%.
Banks traded higher for most of the session after 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.”
To be sure, the major averages were lower earlier in the day amid concerns over the economy reopening.
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.
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
Stocks gyrated as the number of coronavirus cases continues to rise while investors digested a regulations rollback for the big banks.