[New York Close] Relief Rally as Concerns over Socialist President Fade

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The withdrawal of socialist Senator Bernie Sanders from the U.S. presidential primary and the possibility of additional measures by the U.S. Federal Reserve (Fed) lifted the U.S. stock market.

On the 8th (local time) in the New York stock market, the Dow Jones Industrial Average rose 779.71 points (3.44%) to close at 23,433.57, the S&P 500 index increased by 90.57 points (3.41%) to 2,749.98, and the Nasdaq index gained 203.64 points (2.58%) to finish at 8,090.90.

The New York stock market seemed to lose momentum after a sharp rise the previous day followed by a late decline, but it responded positively to the slowing spread of the novel coronavirus infection (COVID-19) and the news during the session that Senator Sanders had dropped out of the primary.

The U.S. stock market had shown sharp declines whenever Sanders gained ground. Each time the self-proclaimed socialist’s support rose, the major indices failed to avoid falling. This was interpreted as the New York stock market, a symbol of global capitalism, being wary of the emergence of a socialist leader. Sanders, along with Senator Elizabeth Warren who had previously decided to drop out, had openly expressed antagonism toward Wall Street.

MarketWatch introduced an expert opinion stating, "Investor sentiment stabilized simply because the possibility of a progressive entering the White House disappeared."

The final factor for the market rise that day was the release of the Federal Reserve's minutes in the afternoon. Fed officials expressed concerns that despite the introduction of zero interest rates, a V-shaped economic recovery would be difficult, but the market focused on their mention that the Fed could take additional measures. The officials suggested that the ammunition was not depleted despite zero interest rates and quantitative easing, and that preemptive guidance and expansion of the Fed’s balance sheet could be implemented.

In this regard, asset management firm BlackRock predicted that the Fed’s balance sheet could reach $10 trillion by next year.

The spread of COVID-19 is also gradually weakening. Although the number of deaths in New York reached a record high that day, according to data from Johns Hopkins University, the daily new confirmed cases in the U.S. have shown a tendency to decrease since peaking at 33,300 on the 3rd.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID) under the U.S. National Institutes of Health, also said, "After this week, we will begin to see a turning point. This is a good sign."

Oil prices rose on reports that oil-producing countries would agree on production cuts at an emergency video conference on the 9th. West Texas Intermediate (WTI) crude oil for May delivery on the New York Mercantile Exchange (NYMEX) closed up 6.2% ($1.46) at $25.09 per barrel. June gold futures rose 0.04% ($0.60) to close at $1,684.30 per ounce.