Investors are applauding an apparent slowdown in New York coronavirus-related deaths. On Sunday – for the first time in seven days – New York reported the rate at which people are dying from the virus appeared to be slowing, a positive sign for a state where the rate appeared to be doubling for days.
Each of the major United States indexes rallied at least 7 percent. The gains marked the biggest daily percentage rise for each index since March 24. The Dow Jones Industrial Average gained 7.73 percent to closed at 22,679.99. The S&P 500 index – a gauge for the performance of US retirement and college savings plans – gained 7.03 percent. The Nasdaq Composite added 7.33 percent.
“Seeing the market soar the way it is, even though the fundamentals continue to be in free fall, the market is looking across the valley and saying ‘six months from now things will be on the ascent,'” said Sam Stovall, chief investment strategist at CFRA Research in New York.
On Monday, New York Governor Andrew Cuomo told reporters that 630 New Yorkers died of virus-related illnesses on Saturday, but that on Sunday, New York recorded 594 virus-related deaths. On Monday, the death toll stood at 599 – also below 600.
The slowdown in deaths in the US COVID-19 epicentre increased hopes that the pandemic is leveling off. The governor also said hospitalisations of coronavirus patients are down in the country’s hardest-hit state. But he cautioned against complacency.
Even with the positive signs, US officials are preparing the country for a “peak death week” from the pandemic, when the death toll could top 10,000. That warning carries with it powerful economic implications.
The Federal Reserve Bank of New York on Monday released the result of its March survey of consumer expectations, which showed expectations that the US unemployment rate will be higher one year from now jumped to an average of 50.9 percent in March – the highest since the survey launched in 2013 and up from 34.2 percent in February.
With higher joblessness comes decreased spending, which could send shock waves through the US economy. The New York Fed’s survey showed expectations for household spending growth slid sharply in the third week of March. Spending growth expectations among surveyed households dropped 0.9 percentage points below the 12-month trailing average to 2.3 percent.
“As a result of the coronavirus and the containment measures put in place to constrain its spread, we now anticipate an unprecedented 40 percent annualised decline in second-quarter GDP [gross domestic product],” wrote Paul Ashworth, the chief North America economist at Capital Economics. His research suggests the US unemployment rate could spike to 12.5 percent.