Wall Street roared back to life on Tuesday, rebounding from the brink of bear market confirmation as bargain hunting and hopes of government stimulus calmed investors’ fears surrounding the coronavirus and growing signs of imminent recession.
The Dow Jones Industrial Average rose 1,167.14 points, or 4.89 per cent, to 25,018.16, the S&P 500 gained 135.67 points, or 4.94 per cent, to 2,882.23 and the Nasdaq Composite added 393.58 points, or 4.95 per cent, to 8,344.25. The TSX was up 443 points at 14,958.
The S&P 500 rallied 4.9 per cent as investors digested a trickle of news that President Donald Trump and his team are looking at measures including cutting payroll taxes and aiding ailing businesses like airlines and cruise operators. Stocks whipsawed throughout another wild day on Wall Street, wiping out a gain of 3.5 per cent to turn negative before a furious rally in the final two hours of trading delivered the biggest gain since December 2018.
“It’s market March Madness at the moment, complete with surprising losses, upsets, and comebacks,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial.
Among the major moves:
- The S&P 500 rose 4.9 per cent as of 4 p.m. in New York.
- Airlines rallied after Trump’s comments. He did not offer details on what he’d do for the group that’s among the hardest hit, as event cancellations mount.
- Energy companies jumped 5 per cent with oil surging.
- Apple spiked higher by 7.2 per cent.
- The Cboe Volatility Index fell below 50.
- The 10-year Treasury yield topped 0.75 per cent.
- German 10-year rates stood at -0.79 per cent
- West Texas Intermediate surged 11 per cent to climb above $34 a barrel.
Volatility continued to grip global financial markets rattled by the virus and an all-out oil price war. U.S. stocks plunged the most since 2008 on Monday, and further selling took futures 20 per cent from records before the rally sparked by Trump’s promise for action Tuesday. The S&P 500 is down 15 per cent from its record. So far, the president has criticized the Federal Reserve and Democratic congressional leaders without providing details of his proposals.
With markets on edge, signs had started to mount that governments around the world are awaking to the need for stimulus measures to combat the virus that is threatening to plunge the global economy into recession.
At the same time, measures to contain the coronavirus continue to undermine prospects for corporate earnings, and raise the danger of a funding crisis, while the oil price crash threatens a swath of defaults among producers. Italy added nationwide travel restrictions to its effective lockdown of the northern region of the country.
“A strong rebound today, if it in fact holds, does not mean the volatility, or even the worst, is behind us. Rather, investors should expect continued gyrations both up and down until there is greater certainty on coronavirus,” said Greg McBride, chief financial analyst at Bankrate.com.
Elsewhere, Japanese government bonds tumbled after an auction of five-year debt flopped.
With files from Bloomberg and Reuters