Dow surges 5% on hopes for central bank help

The Dow Jones Industrial Average surged more than 1,200points, or 5%, on hopes that central banks will take action .

The Dow Jones Industrial Average surged more than 1,200 points, or 5%, on hopes that central banks will take action to shelter the global economy from the effects of the coronavirus outbreak.

The huge gains clawed back some of the ground lost in a massive sell-off last week. Technology companies led the gains.

The Dow jumped 1,293 points to 26,703. It was the biggest-ever point gain for the Dow and the biggest percentage gain since

March 2009. The S&P 500 index rose 135 points, or 4.6%, to 3,089. The Nasdaq added 384 points, or 4.5%, to 8,952.

Despite the pickup in stocks, the bond market signaled that investors are still worried. Bond prices climbed, pushing yields to more record lows.

The big bounce in stocks came after an especially wild day of trading on Friday in which the Dow sank more than 1,000 points before a late wave of buying left it down 350.

Investors are increasingly anticipating that the Federal Reserve

and other major central banks around the world will lower interest rates or take other steps to shield the global economy from the effects of the outbreak.

“Investors have convinced themselves that global central banks will likely be even more accomodative in order to short-circuit any psychological damage, “said Sam Stovall, chief investment strategist at CFRA.

Bill Nelson, chief economist at the Bank Policy Institute and a former Fed economist, said the Fed and other major central banks, possibly including China’s, could announce coordinated rate cuts by Wednesdaymorning.Thecutwould at least be a half-point and perhaps even three-quarters, he said.

“The only way to get a positive market reaction is to deliver more than expected,” he said.

The International Monetary Fund and World Bank announced simultaneously Monday that they are ready to help countries affected by the coronavirus with emergency lending.

“We will use our available instruments to the fullest extent possible,” the IMF managing director, Kristalina Georgieva, and World

Bank President David Malpass said in a joint statement. “International cooperation is essential.”

The statement echoed similar promises to act if necessary from the Federal Reserve on Friday and the Bank of Japan over the weekend. Traders have priced in a 100% probability that the Fed will cut rates by a half-percentage point.

There were signs that the economic impact was continuing to mount. A measure of China’s manufacturing output plunged last month to its lowest level on record, as the viral outbreak closed factories and disrupted supply chains.