WALL STREET BOUNCES BACK FROM MONDAY’S LARGE LOSSES
Stocks jump in morning, then gains evaporate amid virus concern.
Wall Street endured another day of whipsaw trading Tuesday, but the Dow rebounded more than 1,000 points. Experts say these big swings in the market are likely to continue.
— Stocks on Tuesday recouped most of their historic losses from the prior day as hopes rose, faded and then bloomed again on news that the U.S. government will try to cushion the economic pain from the coronavirus.
The S&P 500 surged as much as 3.7% in the morning, only to see those gains evaporate by midday. The index then bounced up and down before turning decisively higher after President Donald Trump pitched his ideas for a break on payroll taxes and other economic relief to Senate Republicans.
By the end of trading, the S&P 500 was up 4.9% and had erased three-fifths of Monday’s loss.
The moves reflected the mood of a market just as preoccupied with the virus as the rest of the world. Since U.S. stocks set their record high just a few weeks ago, traders have crossed over from dismissing the economic pain created by
COVID-19 — thinking it’s similar to the flu and could stay mostly contained in China — to being in thrall to it — worrying that it may cause a worldwide recession.
Severe price swings are likely to continue as long as the number of infections accelerates, market watchers say. In the meantime, investors want to see a big, coordinated response from governments and central banks to shore up the virus-weakened economy.
Monday’s 7.6% plunge for U.S. stocks was the sharpest since 2008, when global authorities banded together to rescue the economy from the financial crisis.
Investors saw glimmers of such a coordinated response, which led to Tuesday’s optimism.
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.
In Japan, a task force set up by the prime minister approved a 430 billion yen ($4.1 billion) package Tuesday with support for small to medium-sized businesses.
But as markets waited on Tuesday for details about Trump’s plan, prices oscillated sharply.
After a meeting with major health insurers, Trump said the government is working with the cruise line industry, one of the hardest hit by the virus. That helped lift the market, which had earlier flipped to losses amid doubts that the government would announce anything soon.
The S&P 500 shuffled along with modest gains until rocketing higher in the last two hours of trading. That’s when Trump made his pitch for economic aid on Capitol Hill.