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Stocks Retrace 90% of Thursday’s Sell-Off With Trump Address Hitting Mark

Vildana Hajric and Claire Ballentine

(Bloomberg) -- A rousing rally swept Wall Street in the final hour of a tumultuous week, unwinding almost 90% of the previous day’s historic rout, as President Donald Trump’s plans to buttress America’s medical capacity to combat the coronavirus soothed Wall Street’s frayed nerves.

Traders who dreaded a repeat of his Wednesday address and the subsequent 10% sell-off came storming back into stocks, extending a 5% rally when he began to more than 9% by the close. In addition to declaring a national emergency, Trump waived interest on federal student loans, vowed virus tests would be “quickly and conveniently” ready, and directed purchases oil for the strategic reserve.

Here’s what investors are saying:

Jennifer Ellison, principal at San Francisco-based BOS:

“I do think that his tone is a little bit different today, he sounds slightly more presidential and we have word that Mnuchin and Pelosi are talking as well. It’s a combination of the tone changing somewhat. The state of emergency goes to show the government is taking this seriously.”

Charlie Smith, founding partner and chief investment officer at Fort Pitt Capital Group in Pittsburgh:

“There was concern that the wooden performance he gave Wednesday night would be repeated and there would be a certain amount of consternation as a result. This event has been much better coordinated, better produced, there was a whole lot more firepower and planning going into this speech than the one that happened the other night and I think the markets are recognizing that. Between Google, Walmart and Walgreens up there on the dais with him, he’s obviously lining up some folks, some companies, some capital and some expertise that’s going to be needed to make this thing work. And it sounds like he’s really finally rallied the troops.”

Mike Stritch, chief investment officer for BMO Wealth Management:

“We had a monster sell-off, so there is probably some exhaustion on the downside so you’re primed for turnaround. It’s another step in the U.S. from a fiscal standpoint, to throw some money behind stabilizing the economy, helping those who need help, that is exactly what the market is looking for some help from the government. They needed some sort of leadership to emerge and an acknowledgment that people were going to react timely and aggressively and we’re starting to see more of that. This looks like a step in the right direction.”

Willie Delwiche, an investment strategist at Baird:

“Bringing in outside experts, whether it’s medical professionals or business leaders helps convey a sense of seriousness and helps instill confidence on the part of investors. And that’s what’s been missing. The Oval Office comments didn’t leave anybody with confidence. The message is one of moving beyond the politics of it and to the wrapping our arms around the problem and working to solve it.”

David Yepez, portfolio manager Exencial Wealth Advisors:

“It gives investors a little bit more assurance that the government is taking this problem seriously, that there was a collaboration between the government and other countries. We aren’t there yet, we don’t know what the consequences for companies will be this year, but a little bit of assurance from the government is good.”

Max Gokhman, the head of asset allocation for Pacific Life Fund Advisors:

“Well remember at first we dropped down 2.3% and then back up to the +9.3% close... I’m a little surprised that the market reaction was so strong. Virtually nothing material that was said was breaking news -- we knew about the drive-through tests, public/private testing partnerships, and the national emergency. One aside, is the student loan interest tax holiday was a smart move ahead of November.”

Michael Antonelli, market strategist at Baird:

“I’d just amplify that the market has been thirsty for action from policy makers. Serious action. You see major CEOs and a president saying ‘we stand ready.’ Americans know how to mobilize for a war and we’re doing that now.”

Nathan Thooft, Manulife Investment Management’s head of global asset allocation:

“We need more but I think people expect more is coming. The tone of this conference is definitely more serious which I think is well received. My initial impression as I listen here is there is some detail, which is good news. Expanding testing availability is a positive. The designation of a national emergency was widely expected. Given Pelosi spoke separately early, I think it was pretty obvious that the Trump administration had not yet reached a compromised package on stimulus. So we will still be waiting for that unfortunately.”

--With assistance from Sarah Ponczek.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Claire Ballentine in New York at cballentine@bloomberg.net

To contact the editor responsible for this story: Jeremy Herron at jherron8@bloomberg.net

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