After a volatile week on Wall Street, stocks temporarily recovered from a bear market, posting three straight days of gains, only to fall on Friday. But, stocks still finished higher for the week.
The Dow fell 915.39 points on Friday, or 4.1 percent and stood at 21,636.78. Friday’s decline was likely due to news that the U.S. has the most confirmed number of cases in the coronavirus outbreak. The S&P 500 was also down by 3.4 percent and fell to 2,541.47. Meanwhile, the Nasdaq was 3.7 percent lower at the closing bell and sat at 7.502.38.
Boeing experienced one of the hardest losses at 10.3 percent lower. The sharp fall for Boeing happened after Steven Mnuchin, Treasury Secretary, said that the airline wouldn’t get a bailout from the government.
Disney and Chevron weren’t far behind at 8 percent down. Tech and energy dominated the losses in the S&P 500. They fell 4.6 percent and 6.9 percent respectively. The energy sector also saw losses due to a 4.8 percent fall in crude prices.
In spite of a few major losses, the Dow ended the week 12.8 percent higher, the largest one-week rise since 1938. The S&P 500 also ended the week higher by 10.3 percent. This marked its best performance since March 2009. The Nasdaq also received its highest weekly gain for the past 11 years, ending the week 9.1 percent higher.
However, the major averages were down by more than 20 percent last month’s record highs, even after the gains.
Maneesh Deshpande, Barclay’s chief equity strategist for the U.S. market, noted: “We believe medium-term risks are skewed to the downside after this rally. Two other uncertainties remain unresolved.”
Deshpande was referring to the length of time needed for the economic quarantine (the time to contain the virus) and the amount of economic damage that will result from doing so.
Deshpande went on to say, “Bear market ‘head-fake’ rallies are not uncommon.” According to Barclay data, the 2000 and 2007 bear rallies had fakes of more than 20 percent before their run ended. But, the most extensive bear market head fake happened in 1937 when the stock market rallied by more than 60 percent before giving up its gains and falling.