Stocks jump on word Saudi Arabia, Russia will drastically cut oil output
Stocks escaped see-saw early trading on Thursday and vaulted to big gains on word that Saudi Arabia and Russia may cut oil production by 10 million barrels a day. Such a move could rescue many oil companies from imminent bankruptcy and aid their lenders.
The Dow Jones industrial average soared nearly 350 points on the back of the energy sector, after spending much of the morning toggling between positive and negative. An overnight spike in crude prices had powered Dow futures up nearly 2%, but those gains quickly evaporated after the Labor Department reported a record 6.6 million jobless claims -- double last week's number and the worst labor news since the Great Depression. The Dow dived into negative territory about 10 minutes after the jobless news, clawed some of it back, then turned red again for the open.
The markets surged after President Donald Trump told CNBC that the Russians and Saudis had agreed in a phone call to drastically cut production.
On Twitter, he wrote that "Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!"
At midday, the Dow was up 50 points, or 1.7%. The broader Standard & Poor's 500 index was up 46 points, or 1.8%, while the tech-heavy Nasdaq composite swelled 115 points, or 1.6%.
European markets had been cruising in positive territory Thursday, but quickly fell back on the U.S. jobless report. Britain's FTSE 100 edged up 0.5%, while the German DAX and French CAC 40 moved up about 0.3%. The benchmark Stoxx 600 climbed 0.8%. Asian markets were mixed, with Japan's Nikkei 225 down while Hong Kong's Hang Seng climbed 0.9% and Shanghai composite up 1.7%.
Stocks have declined three of the past five days, and are way off their all-time highs as the nation heads into what Trump has warned "could be a hell of a bad two weeks." The White House projected Tuesday that as many as 240,000 Americans could die of the virus.
All three indexes are deep in the hole for 2020 after hitting record highs in mid-February. The Dow stands at 29% off its all-time high of Feb. 12, while the S&P 500 is down 27% from its record high on Feb. 19.