Stocks end another whipsaw day solidly higher, led by energy

Stocks are closing solidly higher after another whipsaw day, giving the market its first gain in three days.

Major U.S. indexes rose more than 2% Thursday.

Energy stocks led the way higher as the price of crude oil jumped 25%, bouncing further off an 18-year low, after President Donald Trump said he expects Saudi Arabia and Russia to dial down their price war.

The rebound in oil, which was welcome news to a struggling U.S. energy sector, offset another dire report on the jobs market.

Millions more Americans filed for unemployment benefits last week as businesses shut down because of the coronavirus outbreak.

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Stock indexes turned wobbly on Wall Street Thursday afternoon after giving up much of an early gain driven by a surge in oil prices as hopes grew for a truce in an oil price war between Russia and Saudi Arabia.

The welcome news on oil prices, which have been plunging since the beginning of the year and causing woes for energy companies, overshadowed another report showing the coronavirus outbreak is forcing millions of Americans into the unemployment queue by the week.

The S&P 500 was up 0.6% in afternoon trading after flipping between small gains and losses. It took off in the early going with the price of oil, which surged more than 30% after President Donald Trump said he expects Saudi Arabia and Russia to back away from their price war.

But like oil, stocks gave up a good chunk of their gains as investors questioned how definitive Trump’s comments were. He tweeted only that he expects and hopes for upcoming production cuts after talking with Saudi Crown Prince Mohammed bin Salman.

Trump’s engagement could persuade Saudi Arabia, if not the Kremlin, to relent, said Kevin Book, managing director at Clearview Energy Partners. But an agreement to reduce output by 10 million or 15 million barrels per day would likely require U.S. cuts, too, he said.

Oil producers have been continuing to pull oil from the ground to maintain their market share, even as demand for energy cratered because of widespread stay-at-home orders and other economy-damaging restrictions caused by the coronavirus outbreak. The resulting buildup of oil supplies sent crude’s price spiraling by roughly two thirds in the first three months of the year.

Benchmark U.S. crude oil was up 15.1% at $23.39 per barrel, as of 2:19 p.m. Eastern time. It’s rallying back after dropping below $20 earlier this week to its lowest price since 2002. At the year’s start, it was above $60.

That helped energy stocks in the S&P 500 rally 4.7%, by far the biggest gain among the 11 sectors that make up the index. Schlumberger jumped 6.6%, EOG Resources rose 7% and Occidental Petroleum leaped nearly 14%, but all three remain down by more than half for the year.

“This is a knee-jerk reaction more than anything else,” said Willie Delwiche, investment strategist at Baird. “I don’t think it changes much of the bigger picture for what we’re going through in terms of economic uncertainty and trying to wrap our minds around the extent of the weakness we’re going to see.”

The Dow Jones Industrial Average fell 48 points, or 0.2%, to 20,894, and the Nasdaq was down 0.4%. The Dow had been up as many as 534 points earlier.

The S&P 500 was down as much as 0.6% earlier Thursday after the U.S. government reported that more than 6.6 million Americans applied for unemployment benefits last week. That’s double the prior week’s number, which itself was nearly five times the prior record set in 1982.

Roughly one of every 16 Americans in the workforce has applied for unemployment benefits in the last two weeks, and economists expect the number only to rise further. That has many investors bracing for what may be the worst recession of their lifetimes.

There are more than 980,000 confirmed cases worldwide, led by the United States with more than 226,000, according to a tally by Johns Hopkins University.

For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, and death.

More than 50,000 have died, but over 204,000 have recovered.

Many investors expect markets to remain incredibly volatile until the number of new infections peaks, Only that can clear the uncertainty about how bad the upcoming downturn will be and how long it will last.

The S&P 500 is still down more than 23% for 2020 so far, and investors are preparing for companies to soon begin reporting weaker profits from year-ago levels. Earnings reporting season for the first quarter kicks off in earnest in two weeks.

“The duration and impact of this virus remains unknown and volatility will remain the norm and not the exception,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

“It’s hard to envision the market moving meaningfully higher until you get some visibility of where earnings are going to go,” he said.

To help cushion the blow, Congress last week agreed on a $2.2 trillion economic aid package and the Federal Reserve promised to buy as many Treasurys as needed to keep credit markets running smoothly.

The Fed’s moves in particular have helped improve trading in markets that provide lending to governments, hospitals, companies and other vital areas of the economy, investors say.

Legislators are collecting ideas for a possible new round of aid. President Donald Trump tweeted his support for a $2 trillion infrastructure package. But top Republicans in Congress say they first want to see how well their newly approved programs do.