On Wall Street, some optimism penetrates the uncertainty

Stocks rallied this week as Washington acted to provide $2.2 trillion of relief to an economy shocked by the coronavirus outbreak, leaving some on Wall Street cautiously optimistic that the panicky selling that had gripped the market earlier may have come to an end.

Even after a loss on Friday, the S&P 500 had its best weekly percentage gain since March 2009. The Dow Jones Industrial Average posted its biggest weekly rally since 1938. The gains came after two brutal weeks that conjured memories of the market’s sell-off in 2008 as the government and the Federal Reserve scrambled to contain the financial crisis.

“The takeaway from this week is the initial down phase has probably run its course,” said Willie Delwiche, investment strategist at Baird. “Investors can get out of the duck-and-cover mode and start to figure out what they need to do. But it doesn't mean that we've gotten an all-clear signal.”

The S&P 500 remains 25% below the record highs it set in February, however, after nearly relentless selling earlier this month. Strategists like Delwiche know the outlook is still uncertain, at least until more progress can be made fighting the pandemic and the number of new cases level off and start dropping. This week the U.S. passed China as the country with the most virus cases and the numbers continue to accelerate.

A lot will depend on how badly the coronavirus outbreak stalled the U.S. economy. The government reported a historic spike in applications for unemployment benefits this week and more grim numbers are expected in the weeks ahead. Wall Street has been slashing its estimates for company profits even as the companies themselves say little publicly about the impact on their bottom lines.

“The key at this point is getting a handle on the spread of the virus so that then we can start to...