The U.S. stock markets soared for the first time in three days amid a stabilization in oil prices after plunging to a -$40 a barrel at the beginning of the week.
Dow lost almost 5% of value between Monday and Tuesday while Nasdaq and the S&P 500 were down 4%, a stronger than expected earnings report also contributed to reversing the bearish trend.
The West Texas Intermediate crude futures for June jumped to $13.78 per barrel on Wednesday while Brent futures came in at $20.76 per barrel.
U.S. oil traded in a negative range early this week while Brent had hit the lowest level in eighteen years.
While the financial outcomes of coronavirus are substantial, investors have been considering the bright spots that also include the re-opening of the U.S. economy.
“It looks like we’ve seen oil prices coming back today, and rebounding a bit,”
Allianz Investment Management’s Charlie Ripley said.
“But over the past couple weeks, we’ve seen market sentiment improve. And a lot of that is around what we’ve seen in regards to the number of [COVID-19] cases and plans for re-opening up of the economy.”
Meanwhile, the U.S. Treasury Secretary Steven Mnuchin predicts that the U.S. economy is likely to re-open later in the summer.
The broad rally in energy stocks provided much-needed support to the U.S. market indices. The Dow Jones Industrial Average jumped 2% on Wednesday while the S&P 500 rose 2.3% and Nasdaq grew 2.8%.
Although Netflix has reported stronger than expected numbers for the first quarter, investors’ concerns over future growth have negatively impacted the stock performance in the past two sessions.
It has added almost 16m net new paid subscribers in the first quarter, edging the analysts’ consensus estimate of 8.5m subscribers. However, the company warned that they might see slower subscriber growth once staying at home policies ease.