It's Thursday, the final trading day of an abbreviated trading week -- and it's starting to look like me might end this one on a high note. After back-to-back days of rising share prices, the S&P 500 index is up better than 2% here at the 12:50 p.m. EDT minute mark, the Dow Jones Industrial Average right there beside it, and the tech-heavy Nasdaq trailing -- but still up better than 1%.
Gains do appear to be concentrated among industrial and consumer goods stocks, however, with shares of motorcycle maker Harley-Davidson (NYSE:HOG) up 4.3% for example, used-car seller CarMax (NYSE:KMX) rising 7.5%, and aluminum giant Alcoa (NYSE:AA) gaining 6.9%.
Eliminating the possibilities, we should first point out that there's no stock-specific news today -- certainly not positive news -- regarding any of these three stocks. (Actually, the opposite. Yesterday, CarMax revealed that business has become so dire that it needs to furlough 15,500 workers).
Nevertheless, I'm seeing two more macroeconomic reasons for why stocks are rising today.
In a statement today, Federal Reserve Chairman Jerome Powell noted that the U.S. is "taking forceful measures to control the spread of the virus," closing businesses and issuing stay-at-home and social distancing edicts. These measures entail "significant economic and personal cost," including "very high, although temporary" levels of unemployment and a nascent recession.
That being said, the chairman believes that these efforts will help contain and defeat the coronavirus pandemic. And indeed, today National Institute of Allergy and Infectious Diseases chief Dr. Anthony Fauci rolled back government predictions of up to 200,000 deaths from COVID-19 nationwide, saying that thanks to the success of social distancing efforts, the likely toll now "looks more like 60,000."
Combined with the ameliorative effects of government relief measures, including a $2.2 trillion stimulus package and interest rate cuts "to near zero," Powell is now predicting that "when the spread of the virus is under control, businesses will reopen, and people will come back to work [and] there is every reason to believe that the economic rebound, when it comes, can be robust."
The sooner the pandemic is contained and the recession ends, the sooner consumers will be free to leave their homes and resume buying motorcycles and automobiles -- and the sooner companies like Alcoa can resume production of metal to build those machines full speed.
It hasn't happened yet, but judging from what we're seeing in the stock market today, investors in Alcoa -- and Harley-Davidson and CarMax, as well -- are taking it on faith that all of the above will happen soon.
They aren't waiting around for proof before rushing out and buying stocks.