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Investing.com — U.S. stock markets opened at their highest in nearly a month on Thursday after the Federal Reserve announced the details of its plans to backstop credit to small businesses and local governments across the U.S.
The measures, which had been outlined before but not detailed, earmark another $2.3 trillion in support for the U.S. economy as the Covid-19 pandemic pushes more and more Americans into unemployment. The Labor Department said that another 6.61 million people filed initial claims for jobless benefits last week, more than the 5.25 million expected by economists beforehand, and only fractionally less than an upwardly revised record of 6.88 million the week before.
By 9:35 AM ET (1335 GMT), the Dow Jones Industrial Average was up 258 points, or 1.1%, at 23,691 points. The S&P 500 was up 1.0% and the NASDAQ Composite was up 0.7%.
“An unprecedented level of economic risk will be monetized through a depression-like period of economic distress,” said Lena Komileva, managing director of G+ economics, via Twitter.
Fed chairman Jerome Powell is due to elaborate on the Fed’s latest measures at the top of the hour.
For the first time, the Fed also said it will buy high-yield corporate debt through exchange-traded funds, although it will still devote the bulk of the relevant program to buying investment-grade credit. It will also buy the bonds of so-called ‘fallen angels’ – those recently downgraded to junk from investment grade, if they were downgraded after March 22.
As such, it will be able to depress the borrowing costs of companies like Ford Motor (NYSE:F), which lost its last investment grade credit rating on March 25. Ford stock rose 13.4% in early trading.
