Stocks try to keep the rally going: June 17, 2020

Federal Reserve Chairman Jerome Powell has repeatedly said that both the central bank and the government might need to do more to get the economy through the pandemic recession.

He's hardly the only one.

Yesterday, more than 100 economists, including former Fed Chairman Ben Bernanke and Powell's direct predecessor Chairwoman Janet Yellen, sent a letter urging Congress to pass a “multifaceted relief bill of a magnitude commensurate with the challenges our economy faces.”

Congress and the Fed have already provided unprecedented levels of stimulus to the economy, but the economists think more will be needed to avoid prolonged suffering across the United States -- in particular for Black, Latinx and Native American communities, which have been disproportionately affected by the pandemic and the economic fallout.

Federal Reserve Chairman Jerome Powell is talking to Congress once again today. After testifying before the Senate Banking Committee on Tuesday, Powell will testify before the House Committee on Financial Services today.

During Tuesday's hearing Powell echoed the sentiment of last week's monetary policy update, saying uncertainty remains high -- and that a full recovery from the pandemic recession is unlikely until the public is fully confident that Covid-19 is contained.

Over the past few weeks, US economic data reports have been significantly better than expected. The May jobs report was far better than economists predicted, so were yesterday's retail sales. It seems that the economy is turning a corner.

Even so, millions more jobless claims are expected in tomorrow's Department of Labor data.

Another 1.3 million Americans are expected to have filed for first-time unemployment benefits last week, down from 1.5 million in the week before that. Initial claims have been falling every week since peaking at 6.9 million in the last week of March. Economists think this means that most job losses due to the pandemic are behind us.

Continued claims, meanwhile, which count people who have filed for benefits for at least two weeks in a row, remain high -- they have been above 20 million since mid-April. Experts are looking for this number to come down substantially over the summer. If it doesn't, it could mean that the labor market recovery is much slower than hoped.

The number of continued claims is expected to slip to 19.8 million in tomorrow's report.

There is no definite timeline for when the baseball season will finally start. And it's unclear if the reports that players for the Dallas Cowboys and Houston Texans have tested positive for Covid-19 will jeopardize the kickoff of NFL games this fall. But fantasy sports and gambling company DraftKings (DKNG) is thriving -- and it's cashing in on this success.

DraftKings announced late Tuesday that it plans to sell 33 million shares in a secondary offering. The company is issuing 14 million of the shares and existing investors are selling the remaining 19 million.

Companies often sell more shares following their Wall Street debuts -- especially if the stock has done well. And DraftKings has been a home run/slam dunk/touchdown (or pick your other favorite sports cliche of choice) since the company went public through a merger with a special purpose acquisition company in April.

Shares of DraftKings are up nearly 130% since they began trading. The stock rose about 1% Wednesday -- even though investors often worry that new stock sales will dilute the value of existing shareholders. DraftKings said last month that sales in the first quarter rose 30% from a year ago as gamblers bet on events such as virtual NASCAR races and esports tournaments.

Markets soared on hopes for more fiscal stimulus yesterday. A potential infrastructure package could help the country out of its pandemic recession, according to ratings agency Standard & Poor's.

"The coronavirus pandemic abruptly halted the longest economic expansion in US history. But a $2.1 trillion boost of public infrastructure spending could add as much as $5.7 trillion to the US economy over the next decade," according to S&P.

This would create 2.3 million jobs by 2024 and boost personal income.

Sure, more than 20 million jobs vanished at the height of the pandemic, but every jobs added back will help getting the country back on track.

"Infrastructure is not only about highways -- our public health agencies and information systems are part of it, too, and the Covid-19 pandemic has made the need to fix them all the more urgent," said Beth Ann Bovino, S&P's US chief economist.

Homebuyers are back.

The economy, including the real estate market, ground to a halt during the first months of the coronavirus crisis, but now things are looking up.

Building permits and housing starts increased in May, the Census Bureau reported today, albeit not as much as economists hoped. And while the numbers are below their pre-pandemic level, the rebound is a much-needed bright spot in recent US economic data.

Meanwhile, mortgage applications soared by 8% on a seasonally adjusted basis in the week ended June 12, the Mortgage Bankers Association reported.

"Purchase applications increased to the highest level in over 11 years and for the ninth consecutive week," said Joel Kan, associate vice president of economic and industry forecasting at MBA.

The pent-up demand from when the country was on lockdown in early spring is now boosting the numbers.

"Mortgage rates dropped to another record low in MBA's survey, leading to a 10 percent surge in refinance applications," Kan added. "Refinancing continues to support households' finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery."

So much for a third day of gains. Not even an hour into the trading day, the Dow pared its modest winnings and dipped into negative territory.

The S&P 500 followed suit shortly, as the indexes flipped between red and green.

The Nasdaq Composite is holding onto its gains the best, and remained staunchly higher.

US stocks inched higher on Wednesday, in an effort to keep the rally going.

After Tuesday’s massive rally that had the Dow jump more than 800 points at its best, markets have pulled back some as investors are digesting more reports of increasing coronavirus infections. Still, we’re looking at the fourth-straight day of gains for US stocks.

Remember the beginning of the coronavirus crisis in America? The flight to safe haven investments, the panic in the markets? It feels like a very long time ago, but it was only a few months back.

The yield on US Treasury bonds collapsed while prices soared because investors wanted to park their money in a safe place.

One of the first measures the Federal Reserve took to help the economy through the pandemic crisis was to bolster liquidity in fixed income markets.

And looking at the Treasury yield curve now, it seems to have worked, said Frances Donald, global chief economist and head of macro strategy at Manulife Investment Management.

Rather than yield curve control -- a tool used by other central banks like the Bank of Japan -- the Fed has been able to manage yields simply by buying bonds in the market. That said, the Fed has talked about yield curve control as a potential measure.

"The latter is most important: the threat of YCC is almost as effective as YCC itself," said Donald.