TSX and Dow make gains Thursday but coronavirus volatility continues

Stock markets eked out modest gains on Thursday as investors digested new financial support measures to deal with the economic impact of the coronavirus sweeping the globe.

The Toronto Stock Exchange's benchmark index was up by 449 points or almost four per cent by the time trading shut down for the day.

In New York, the Dow Jones industrial average rose 189.63 points, or almost 1 per cent to 20,088.55, the S&P 500 gained slightly less in percentage terms and the technology-heavy Nasdaq was up by more than two per cent.

Though meagre, even those modest gains were welcome news to battered stock investors. Markets have been so volatile because investors are weighing the increasing likelihood of a recession on one hand against huge, emergency efforts to prop up the economy on the other. Markets got more of each on Thursday.

"Every day there's another announcement of what the stimulus is going to look like, but what seems to be apparent is the recognition ... that funding is going to have to be larger, more significant than initially expected," said Quincy Krosby, chief market strategist at Prudential Financial. "And that they are prepared to do whatever it takes to cushion the downside of what is increasingly looking like an impending recession."

Investors also appeared encouraged by reports that China is set to ramp up stimulus spending after the province where the virus first emerged showed no new infections on Wednesday. That likely helped boost the price of U.S. crude oil by almost 24 per cent on Thursday, nearly making up all of its losses from the day before, Krosby said, noting that China is one of the world's biggest oil importers.

The Canadian dollar fell to its lowest level since 2003 on oil's weakness on Wednesday, dipping below 69 cents US. But rallied somewhat on Thursday as oil recovered.

Still, the market will likely remain volatile until investors see more economic data that shows just how badly the outbreak is hurting the economy.

"They're doing what they can, and I'm not sure what else they can do," said Sal Bruno, chief investment officer at IndexIQ.

Major indexes started the day lower, then rose before and during a late morning news conference led by President Donald Trump to give updates on the outbreak. The gains were mostly gone in early afternoon trading as the indexes turned mixed. The indexes snapped back into the green by mid-afternoon, however.

European stocks swung from gains to losses and back to gains. Asian markets dropped following the brutal 5.1 per cent loss for U.S. stocks the prior day.

Ultimately, investors say they need to see the number of new infections stop accelerating for the market's extreme volatility to ease.

The total number of known infections has topped 220,000 worldwide, including nearly 85,000 people who had recovered. The death toll has crept toward 10,000.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.

Until the number of new cases peak, investors will struggle with uncertainty about how much to pay for a stock, bond or commodity when they don't know how long the economic downturn will last. Many economists expect a sharp drop in the economy, but they disagree on how long it will take to bounce back.

The hope is that all the emergency actions by central banks and spending by governments can provide support for the economy in the meantime and soften the blow. The Trump administration has pitched lawmakers on a program that could flood $1 trillion into the economy, including checks sent directly to households.

The New York Stock Exchange said late Wednesday that it will temporarily close its trading floor and moving to all-electronic trading beginning Monday after two employees tested positive for coronavirus. The exchange has also started medically screening all personnel who enter the building. Much stock trading has gone electronic in recent years, and there are far fewer floor brokers than there used to be.