STOCK ROLLER COASTER RIDE TAKES A 4.9% UPWARD TURN
After a shocking start to the week, U.S. stocks on Tuesday rallied on reports of a government stimulus that would help cushion the country from the economic effects of the growing coronavirus.
The Dow Jones industrial average jumped 1,167 points, 4.9%, recovering more than half its losses from Monday — which was the blue chip index’s worst day since the 2008 financial crisis. The Standard & Poor’s 500 and techheavy Nasdaq composite also finished near 5 percent gains on Tuesday. The S&P closed at 2,882, up 135 points. The Nasdaq finished at 8,344, up 394 points. Financial and technology stocks were leading the way for all 11 market sectors in the S&P 500 index.
New York — Stocks on Tuesday recouped most of their historic losses from the prior day as hopes rose, faded and then bloomed again on Wall Street that the U.S. government will try to cushion the economic pain from the coronavirus.
The day’s moves were a microcosm of the severe swings that have dominated recent weeks, and market watchers say they are likely to continue until the number of infections stops accelerating. In the meantime, investors want to see a big, coordinated response from governments and central banks to shore up the virus-weakened economy.
The S&P 500 surged as much as 3.7% in the morning, only to see the 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%. It erased three-fifths of Monday’s loss, which was the sharpest since 2008, when global authorities banded together to rescue the economy from the financial crisis.
The volatility 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 could stay mostly contained in China — to being in thrall to it — worrying that it may cause a worldwide recession.
Investors saw glimmers of a coordinated response, which led to Tuesday’s optimism.
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 until rocketing higher in the last two hours of trading after Trump made his pitch for economic aid on Capitol Hill. Treasury Secretary Steven Mnuchin also met with House Speaker Nancy Pelosi, whose support would be needed for any deal in a divided Congress. Mnuchin called the meeting productive.