Virus-ravaged markets stabilize after worst day since 1987
Moves planned to limit impact of coronavirus
U.S. stocks rebounded Tuesday after the White House laid out additional plans to help cushion the economy from the coronavirus pandemic.
President Donald Trump and Treasury Secretary Steve Mnuchin said they are exploring the idea of legislation under which checks would be sent to Americans to help them manage the economic impact of the virus.
The gains follow the market's worst sell-off in more than three decades on Monday.
The Dow Jones Industrial Average climbed 1,048.86 points, or 5.2%, to close at 21,237.38. The S&P 500 rose 6% to finish at 2,529.19. Both indexes had their worst day since the “Black Monday” stock market crash of 1987 the previous day.
Monday's 12% drop for the S&P 500 came as voices from Wall Street and the White House warned the coronavirus may drag the economy into a recession.
Stocks also got a boost after the Federal Reserve said it was reviving a crisisera source of funding for businesses that need short-term loans, a move aimed at countering the economic impact of the virus.
“There are monetary and fiscal policies that are being put in place to try to ease financial market concerns, but this is ultimately a health issue,” says Tom Myers, CEO and managing partner at Bordeaux Wealth Advisors. “We're going to need to see data that shows the severity of this virus situation is abating and getting better. Markets are assuming the worst right now.”
The S&P 500 has shed nearly 30% since setting a record high less than a month ago, and it's at its lowest point since the end of 2018. Monday's precipitous losses accelerated in the last halfhour of trading after President Donald Trump said the economy may be headed for a recession and asked Americans to avoid gatherings of more than 10 people.
The plunge came even though the Federal Reserve on Sunday rushed to announce a new round of emergency actions before financial markets opened for the week.
“There's a lack of demand across so many industries, it's almost certain that there will be layoffs throughout the economy,” says Stephen Guilfoyle, founder and president of Sarge986 LLC, a family-run trading operation.