The market jumped dramatically on the open because the Fed announced the previous day that they were buying corporate bonds, and the steroid dexamethasone stops many coronavirus deaths – way more than the hydroxychloroquine promise.
One hour after the open, Fed Chair Jerome Powell started to speak and was greeted with the same love he usually gets. Like an abused Stockholm syndrome patient, Mr. Powell keeps coming back for more talks despite the market falling after almost every time. He is a bright guy. He has to know it is an indication the market has no faith in him – right or wrong.
Personally, I would hang out in the board room eating foie gras and Dom Perignon and slide the monthly interest rate decision under the door before heading to the Hamptons. He is trying, though.
The market wiped out 76 points in the SPX quickly, before bouncing back again. The rest of the day was spent with SPX bouncing its head off 3,140. Travel stocks did decent returns, but it was the FAANG stocks that traders fell in love with all over. The Dow closed up 526 points and the NASDAQ closed higher by 158 points.
Other than selling the overdone open, which I missed, I didn't see a lot of things to do. If in fact, we are close to an existing cure for the virus and the Fed is buying everything not nailed down, this market should have been higher than 500 points. It almost made me nervous about the downside, so I mostly sat on my hands.