The Federal Reserve announced several new measures on Monday to Stabilize Markets .

UPDATE: Dow has best day since 1933 as Congress nears deal on $2 trillion virus rescue

The Dow Jones Industrial Average surged more than 2,000 points Tuesday as U.S. political leaders said they were nearing a deal on a massive government stimulus package to offset the damage inflicted by the coronavirus pandemic.

The Dow’s gain of 11.4% was its largest percentage increase since 1933. 

The Dow Jones Industrial Average closed up 2,112.98 or 11.37% to 20,704.91. 

The NASDAQ composite index was up was up 557.18 or 8.12% to 7,417.86. 

The S&P 500 was up was up 209.93 or 9.38% to 2,447.33.

The huge gains on Wall Street followed a worldwide rally as a wave of buying interrupted what has been a brutal month of nearly nonstop selling. Despite the gains, investors were far from saying markets have hit bottom. Rallies nearly as big as this have punctuated the last few weeks, and none lasted more than a day.

Investors have been frustrated waiting for the U.S. government to do what it can to help the economy, which is increasingly shutting down by the day. But both Democrats and Republicans said Tuesday they’re close on a massive economic rescue package, which will include payments to U.S. households and aid for small businesses and the travel industry, among other things.

A vote in the Senate could come later Tuesday or Wednesday, and if approved, it would follow the latest round of extraordinary aid launched by the Federal Reserve on Monday.

Before the U.S. market opened, global stocks surged and U.S. futures raced ahead so much that trading had to be halted.

»MONDAY’S CLOSE: Dow sinks another 3% as coronavirus stimulus bill stalls

Before the trading suspension in the U.S., Dow futures and the broader S&P futures were up by the maximum 5%.

»MORE: Here are the companies that are hiring during the economic crisis

Stock markets around the world, from Japan’s Nikkei to Germany’s DAX,  spiked by more than 5%. Despite the gains, most indexes are still down around one-third from where they started the year.

What’s happening

In the U.S., sentiment appears to have been boosted after top congressional and White House officials emerged from grueling negotiations about a nearly $2 trillion coronavirus rescue package, saying they expected to reach a deal Tuesday. 

»COMPLETE COVERAGE: Everything you need to know about coronavirus

That aid would come on top of the Fed’s announcement Monday that it would buy as many Treasurys and other assets as needed, including corporate bonds for the first time, to keep financial markets functioning.

What’s at stake

Whether the gains can be built on in coming days will likely hinge on how effective the measures taken by governments are to get on top of the outbreak. The number of known infections worldwide jumped past 392,000. After just a few weeks, the United States has more than 43,000 cases and more than 540 deaths.

World markets rise

Governments and central banks in other countries around the world are also unveiling unprecedented levels of support for their economies in an attempt to limit the scale of the upcoming virus-related slump. Germany, a bastion of budgetary discipline, is also mulling a big fiscal boost.

In Europe, Germany’s DAX was up 6.6% at 9,321, while the FTSE 100 index of leading British shares spiked 4.2% at 5,202. France’s CAC-40 soared 5.7% to 4,139.

Earlier in Asia, Tokyo’s Nikkei 225 rose 7.1% to 18,092.35, and the Kospi in Seoul surged 8.6% to 1,609.97. The Shanghai Composite Index was 2.3% higher at 2,722.44, and Hong Kong’s Hang Seng gained 4.5% to 22,663.49. Australia’s S&P-ASX 200 gained 4.2% to 4,735.70, and India’s Sensex added 3.1% to 26,776.71. New Zealand rose 7.2%, and Singapore added 5.3%.

Global recession

A raft of economic surveys released Tuesday, including from Japan and Europe, provided clear evidence of the scale of the recession the world is in as many countries around the world impose draconian lockdown restrictions on economic activity, the latest being Britain.

»MORE: Bank of America and US economists say nation is officially in recession

“Everyone was prepared for a set of shockers, and that is precisely what we got, but they are not a surprise,” said Chris Beauchamp, chief market analyst at IG. “It is at times like this that the market’s propensity to look forward is demonstrated most effectively.”

Energy markets

In energy markets, benchmark U.S. crude rose $1.40 to $24.76 per barrel in electronic trading on the New York Mercantile Exchange, while Brent crude, used to price international oils, added $1.17 to $28,20 per barrel in London.

In the currency markets, the euro was up 1.5% at $1.0876, while the dollar fell 0.7% at 110.45 yen.

Wire coverage

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Virus wanes in China

A further boost to sentiment has come from the news that China is preparing to lift the lockdown in Wuhan, the epicenter of the outbreak, and from Italy reporting a reduction in the number of new cases and coronavirus-related deaths.

“It’s still early days, of course — perhaps investors can start to envisage life beyond the coronavirus,” said Craig Erlam, senior market analyst at OANDA Europe. “That could make stocks look a little more attractive, although anyone jumping back in now will need to have nerves of steel.”

— This report was compiled by ArLuther Lee for The Atlanta Journal-Constitution.

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