Stocks roar back on hopes of stimulus

North American stock markets roared back to life Tuesday on hopes of a massive U.S. government stimulus package and positive data from Italy regarding the novel coronavirus outbreak.

The S&P/TSX composite index closed up1,342.59 points, or almost 12 per cent, at 12,571.08.

In New York, the Dow Jones industrial average enjoyed its largest daily gain since 1933 by rising 2,112.98 points, or 11.3 per cent, at 20,704.91. The S&P 500 index was up 209.93 points at 2,447.33, while the Nasdaq composite was up 557.18 points at 7,417.86.

The steep climbs came after some volatile days of trading that has seen the TSX lose about 40 per cent of its value since posting record highs about a month ago.

“You’ve got to put this in context. We’ve had some horrific days preceding today,” said Natalie Taylor, a portfolio manager with CIBC.

After two failed attempts to reach a $2-trillion (U.S.) stimulus package, the U.S. Congress appears to be getting close to reaching a deal.

That’s on top of the Federal Reserve cutting interest rates a number of times and agreeing Monday to unlimited quantitative easing.

Adding to hopes are signs that the number of new confirmed COVID-19 cases and deaths is starting to taper off in Italy, pointing to a positive outlook for North America.

All11major sectors on the TSX closed substantially higher, led by consumer discretionary, financials, materials, utilities and energy. Consumer discretionary climbed 13.6 per cent as Magna International Inc. increased by nearly 20 per cent.

The heavyweight financials sector gained 13.4 per cent with Power Corp. of Canada up 20.5 per cent and Manulife Financial Corp. increasing 20.1 per cent.

A surge in gold and copper prices helped materials to gain 12.5 per cent as First Quantum Minerals Ltd. was up 41.9 per cent.