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Why Boeing Stock Popped 6% (Again) Today

By Rich Smith – Apr 9, 2020 at 4:32PM

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The Fed chairman's words injected a dose of optimism into Boeing stock.

What happened

Boeing (BA -0.64%) stock shot up as much as 6% yesterday on sorta-kinda good news about the novel coronavirus possibly getting under control. Boeing stock was surging again today -- up another 5.9% as of 12:10 p.m. EDT -- and apparently, for pretty much the same reason.

So what

As Federal Reserve chairman Jerome Powell explained in a statement today, the U.S. is "taking forceful measures to control the spread of the virus." On the one hand, these measures, which include "businesses ... shuttered, workers ... staying home, and ... many basic social interactions ... suspended," have come "at significant economic and personal cost," including "very high, although temporary" levels of unemployment.

On the other hand, the government has taken dramatic action to mitigate the damage, including passing legislation to deliver "$2.2 trillion in relief to those who have lost their jobs, to low- and middle-income households, to employers of all sizes, to hospitals and health-care providers, and to state and local governments," and dropping interest rates "to near zero."

Today's unemployment report, which reflects 6.6 million more jobs lost in the past week, shows that it's going to take some time for these measures to take effect, even as the country struggles to control the pandemic while burdened by the effects of an economic recession. Nevertheless, the chairman predicts that "when the spread of the virus is under control, businesses will reopen, and people will come back to work."

Said Powell: "There is every reason to believe that the economic rebound, when it comes, can be robust."

Boeing 737 MAX 8 in flight

Image source: Boeing.

Now what

Boeing investors appear to be taking these words to heart, and bidding up shares of the aerospace company despite the lack of any Boeing-specific good news today. While I can't fault them for doing so, today's stock surge does appear to be predicated entirely on hope that Chairman Powell's prediction turns out to be correct.

Because absent that hope, there's really no other reason why Boeing stock would be going up so much today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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