Stocks soar on stimulus plan, Biden wins
The Dow Jones Industrial Average soared more than 1,100 points, or 4.5%, Wednesday as governments and central banks around the globe took more aggressive measures to fight the virus outbreak and its effects on the economy.
The gains more than recouped the market’s big losses from a day earlier as Wall Street’s wild, virusfueled swings extended into a third week.
Stocks rose sharply from the get-go, led by big gains for health care stocks after Joe Biden solidified his contender status for the Democratic presidential nomination. Investors see him as a more business-friendly alternative to Bernie Sanders.
The rally’s momentum accelerated around midday after House and Senate leadership reached a deal on a bipartisan $8.3 billion bill to battle the COVID-19 outbreak. The measure’s funds would go toward research into a vaccine, improved tests, and drugs to treat infected people.
Investors are also anticipating other central banks will follow up on the Federal Reserve’s surprise move Tuesday to slash interest rates by half a percentage point in hopes of protecting the economy from the economic fallout of a fastspreading virus. Canada’s central bank cut rates on Wednesday, also by half a percentage point citing the virus’ effect.
Some measures of fear in the market eased. Treasury yields rose but were still near record lows in a sign that the bond market remains concerned about the economic pain possible from the fast-spreading virus. Companies
around the world are already saying the virus is sapping away earnings due to supply chain disruptions and weaker sales, with General Electric becoming the latest to warn its investors.
Even though many investors say they know lower interest rates will not halt the spread of the virus, they want to see central banks and other authorities do what they can to lessen the damage.
The S&P 500 sank 2.8% on Tuesday after a brief relief rally triggered by the Fed’s rate cut fizzled.
The S&P 500 rose 126.75 points, or 4.2%, to 3,130.12. The benchmark index has had five days in the last two weeks where it swung by more than 3%. In all of last year, it had just one. The Dow gained 1,173.45 points to 27,090.86. The Nasdaq climbed 334 points, or 3.8%, to 9,018.09.
The index, which is heavily weighted with technology companies, now has a slight gain for the year.