Market Recap: Wednesday, May 20

Stocks rose Wednesday and the Dow advanced more than 300 points, or 1.2%, as hopes surrounding some states’ reopenings extended during the session. Yahoo Finance's Jen Rogers, Myles Udland, Rick Newman, and Andy Serwer discuss on The Final Round

Video Transcript

MYLES UDLAND: About 40 seconds to go in today's trading session. We're going to see all three majors notably higher on the day here, the NASDAQ leading the way. The tech index now up better than 2 percentage points as we head towards the bell. The Russell 2000 up about 3%, the S&P and the Dow about 1.5% each. But again, second time in three days we've seen a nice rally here as the market continues its climb off those March 23 lows. This is the fourth training session since those lows, and we're up about 30%.

[BELL RINGING]

All right. That was the closing bell down there on the floor of the New York Stock Exchange, of course. We are-- what, we've only got two more full trading sessions before we expect to see a few more folks down there on the floor. The floor will open up in a limited capacity on Tuesday. We won't have the full crowds. There will be social distancing on the floor. But I think a nice change as things begin to slowly normalize here in the US, and I think a lot of eyes are on what happens right here in New York City, how life gets back to something like normal, certainly the hardest-hit area of the country here in the tri-state area.

But again, rally on our hands on this Wednesday. We want to talk just a little bit about the banks. KBW bank index up some 3.3% during today's trading session. The regionals were up nearly 6%. And we've talked so much about how the banks have been laggards during this period, still kind of fitting into that value, that cyclical basket that investors have just not been excited about. We have seen the stay-at-home trades, the FANG names, big cap tech growth.

And I think to some extent also, the consumer staples and defensive trades have been kind of an odd pair in this market, and the cyclical sectors have just not gotten a huge bump. But financials starting to slowly get their act together just a little bit. I mean, JP Morgan shares still down 35% from their most recent highs. But when you look at the overall sector, off about 40%, maybe some signs of life there looking at some of the financial names.

I want to bring in Yahoo Finance Editor in Chief Andy Serwer now for a little bit more on today's market, Andy, and I guess where we stand in all this. I mean, the S&P right now 29 points away from 3,000. We've seen just a tremendous amount of price repair in the stock market, but it doesn't really feel like everything is all fixed, I guess, on Main Street.

ANDY SERWER: Yeah, there are a lot of little threads here today, kind of interesting. When you mention that level of getting close to 3,000, we're really talking in Jared Blikre territory here. We're at the 200-day moving average. Jared has got to be proud of me that I knew that kind of stuff.

But yeah, so what's not to like there? And the money that you were talking about at the banks, the money explosion Odeon Capital's Dick Bove was talking about today, which is in terms of the Fed being expansive and putting a lot of money into the system, is why those stocks are on the move. He upgraded JPM.

But if I was looking sort of bigger picture, I could've painted a very negative on today. I mean, I'm sure Anjalee is going to talk about the COVID cases hitting an all-time high today according to WHO, 100,000 new cases, Latin America being impacted. And then really a fascinating story in "The Wall Street Journal" crossing the tape today as well about how the market almost melted down on March 16, and really scary, money market funds almost breaking the buck. And that matches the sort of language from the Fed minutes about the extraordinary amount of fear and uncertainty out there as well.

And yet here we are with some of the worst-hit stocks like MGM and UA bouncing back, and then the techs, like Facebook and Amazon, which are now warring increasingly-- we'll get into that-- hitting all-time highs, or new record highs, Myles, as we don't like to say. So it's kind of a mixed picture. But is it possible the trend is up, and that's what makes the market go up today?

MYLES UDLAND: Well, Rick, I think to Andy's point about that "Journal" story, like, we were all sitting here in mid-March, and maybe we didn't know the full story, but it didn't take a rocket scientist to look at the market and say, I think we've got a major problem here in terms of what's going on. And I don't know. Maybe it's just that we're all in it too much to realize that the average person maybe has moved on a little bit. But I think I still find myself fighting. Wasn't it only two months ago that the entire world was ending? How can this possibly be on a day-to-day basis where the stock market seems to be kind of just moving on with its life?

RICK NEWMAN: You know, in mid-March, there were plenty of reasons to explain what was then a market heading toward its bottom, about-- what, 10 days or two weeks away from its bottom in late March. I mean, all that selling made sense just based on what we knew. I mean, Trump had declared a national emergency. I think that was March 15. We were all starting to understand we were going to have these widespread business closures.

So I'm not sure we missed it. I think it was-- it was even worse than we knew. And it feels to me like what's happening now is we are now identifying one company or one sector at a time who the survivors are going to be. So very interesting. Today we saw an uptick-- you know, kind of a big move up in mortgage applications. That means people think this is a good time to buy a house.

I mean, think about it. So you've got-- 37 million people have lost their job during the last two months, but a bunch of other people are looking around and saying, I feel OK. And this probably seems like a good time to buy the dip in the housing market. You know, so people are taking advantage of what's happening. People-- some parts of the economy are saying I see life after coronavirus. I think we're far from over from this, and I think we're going to have many back slides, or at least a few serious back slides. But for the moment, it feels like we're looking around, and some parts of the economy see life after this crisis.

MYLES UDLAND: Well, and Andy, to Rick's point about buying a dip in the housing market, I kind of wonder if consumers-- like, if a lot of people look back at what happened during the financial crisis, and they saw the stock market-- they saw the way the economy rebounded, and they said, you know, I'm not going to let the next opportunity pass me by. I'm going to be aggressive when I see some crisis come up. But to Rick's point, I mean, in some ways, this crisis has only just begun. I think it's-- I don't know how I feel about people getting aggressive in the housing market at this point in what's expected to be an extended recessionary cycle.

ANDY SERWER: Yeah, it's curious, isn't it? I mean, what you're suggesting, Myles, is the dumb money is becoming smart. And that's sort of never really the case. I also wonder if it's people moving out of cities. You know, could that be possibly spurring this? Who knows?

You know, in every one of these crises, I think it's really important remember it's exactly the same and completely different, both at the same time. And so yes, it's instructive to look at 2008 and 2009, but only to a degree, because if you think it's going to be a blueprint in a mirror, you're sadly mistaken. And yeah, sure, at some point, it is a good time to buy. And Warren buffet is going to tell you it's always a good time to buy if you're holding for 20 years, and he's right.

But it's tricky, and it doesn't seem like there's been this, like, wow, amazing buying opportunity because we've snapped back. But everyone is saying that while the decline was precipitous, the recovery will not be. But it doesn't match the stock market, so it's curious.

RICK NEWMAN: I think-- so I think the psychology in the real economy-- it feels to me like there are two types of people. There are people who have lost their jobs already or had their hours cut back or people who feel their jobs are endangered. That's one bucket. And the other group of people is looking around and saying, I think my job is probably OK. And I keep hearing the economists say we are in the lowest moment now. The worst is almost in the rearview mirror.

So it's kind of like you have this one-- this one group of survivors that is saying, I really just need to kind of go back and figure out the best way to get back to something that feels normal. I'm not sure that's right. But if there are some significant group of consumers who are saying, I'm feeling OK amid all this chaos, it's better than everybody being freaked out.

MYLES UDLAND: Yeah, I mean, I don't know. I think I've long talked about and thought about how most of this comes down to what happens with people's kids, right? If kids go back to school in September, I think we're going to kind of think the world is back to normal. And we see more and more colleges suggesting they're going to have students on campus.

And so to that point, Rick, I think-- you know, again, as someone who's in it every day-- we're looking at all of the data every day. We're going to get an update in two seconds from Anjalee about how many cases there are, the rate of change in the cases, any new innovations. I'm wondering if people who aren't as steeped in it are looking around and saying, well, I knew some people who got sick. I don't know anyone who's sick anymore. And I think it's time for us to start thinking about something else here, because it feels like the enthusiasm around sheltering in place and the energy we all had for flattening the curve-- it feels like a lot of that has kind of come out of the balloon, I guess, to some extent here in the last couple of weeks.

RICK NEWMAN: Coronavirus fatigue, you might call it.

MYLES UDLAND: Yeah, especially when the experts tell us it's going to be here for two years. People are like, all right, well, I'm not going to be able to keep this up for two years, so we're going to have to figure something else out. And I think that's a lot of what is happening right now.