Stocks claw higher on Wall Street as Washington moves to ease fears

Stocks are broadly higher on Wall Street Tuesday after another bout of volatile trading took the Dow Jones Industrial Average up 945 points in the early going and then briefly into the red by lunchtime.

Markets bumped up again just around midday after Vice President Mike Pence said the nation’s big health insurers would cover copays for coronavirus testing. The Dow was up 289 points, or 1.2%, to 24,140 in the early afternoon.

Investors are likely to see more big swings until the number of infections from the new coronavirus decelerate, market watchers say, and they also want a big, coordinated response from governments and central banks.

The early surge came as investors hoped for more action to shore up a virus-weakened global economy.

In a meeting with major health insurers, Pence said those companies have agreed to waive co-pays on coronavirus testing. President

Donald Trump, meanwhile, said the government is working with the cruise line industry, one of the hardest hit by the virus. Neither said anything during the brief televised remarks about a potential cut to payroll taxes.

At a White House press briefing Monday night, Trump said his administration would be asking Congress to pass payroll tax relief and other quick measures aimed at easing the impact of the coronavirus on workers.

The market’s huge swings took

the S&P 500 on Monday to its worst day since the 2008 financial crisis. Even Tuesday’s big morning gains were tentative: After spurting to a gain of 3.7%, the S&P 500 quickly gave up more than half of it.

Dizzying swings have been relentless in markets the last few weeks. Stocks had a couple days last week where they rose more than 4%, only for the bottom to give out again.

Nonetheless, hope was rising that the big support efforts from global authorities that markets have been waiting for may be on the way, at least in a piecemeal way. Investors are worried about fallout to the global economy from the coronavirus outbreak, which has pushed airlines to cancel flights and prodded Italy to lock down the entire country.

In Japan, a task force set up by the prime minister approved a 430 billion yen ($4.1 billion) package with support for small to medium-sized businesses.

“Markets don’t trade on good or bad, they trade on better or worse,” said Alec Young, managing director of global markets research at FTSE Russell.

“I would expect the authorities to pull out all the stops to reduce uncertainty,”

Young said. “This may be their one opportunity to do that.”

Treasury yields also pushed higher in a sign that fear has receded a bit, though they remain far below where they were even a week ago.

The 10-year Treasury yield rose to 0.64% from 0.49% late Monday. A week ago, it had never been below 1%.

The recovery is pulling the stock market away from the edge of a bear market, defined as a drop of 20% from a record high. The S&P 500 is down 17.7% from its high set last month. If it can rally back to that point, it would extend the longest-ever bull market, which was born 11 years ago after the market hit bottom on March 9, 2009.

Brent crude, the international standard, rose $2.77, or 8.9%, to $33.91 a barrel, while benchmark U.S. crude rose $3.09 to $37.42 a barrel. Oil prices plunged 25% on Monday amid a price war between producers, who are pulling more oil out of the ground even though demand is falling due to the virus.

Monday’s collapse in oil prices prompted the Department of Energy to suspend a recently announced sale of crude oil from the nation’s strategic petroleum reserve.

Meanwhile, Occidental Petroleum slashed its quarterly

dividend to 11 cents per share from 79 cents and said it will cut capital spending by about 30% this year. The stock was the biggest gainer in the S&P 500, vaulting 10.4%. The company’s shares dropped nearly 70% in the previous two trading sessions.

For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia.

The vast majority of people recover from the new virus. According to the World Health Organization, people with mild illness recover in about two weeks, while those with more severe illness may take three to six weeks to recover. In mainland China, where the virus first exploded, more than 80,000 people have been diagnosed and more than 58,000 have so far recovered.

But because the virus is new, experts can’t say for sure how far it will ultimately spread. That has investors worried about the worst-case scenario for corporate profits and the economy, where factories and supply chains are shut around the world due to quarantines and people stay huddled at home instead of working or spending.

That’s why many say the market will continue to swing sharply at least until the number of new cases decelerates.

Central banks around the world, which have done some of the heaviest lifting to prop up markets and business confidence over the last decade-plus, have already used up most of their ammunition. Several have already cut rates below zero, and the Federal Reserve’s benchmark rate is sitting at a range of 1% to 1.25%.

Traders expect the Fed to cut rates again at its meeting next week. They’re also expecting some kind of action from the European Central Bank, which meets on Thursday, even though rates on the continent are already below zero.

The limited firepower for central banks adds pressure on governments to do what they can as well. Investors are asking for quick, coordinated aid to provide support to companies and households who are going to be out income because of the virus.

For strategists at BlackRock Investment Institute, that could include generous sick-pay programs or even direct payments to households. For businesses, governments could suspend collecting tax revenue to give them some temporary relief and hold on to cash as the world waits for the outbreak to be contained.