Stocks rallied Tuesday as President Donald Trump promised he's “going big” with plans to prop up the staggering economy through the coronavirus outbreak.
The market got back not quite half of what it lost in a breathtaking drop a day earlier, which was the biggest in more than three decades. The S&P 500 rose 6% and the Dow rose 5.2%, or 1,049 points.
Treasury Secretary Steven Mnuchin said the government intends to send to checks to Americans in the next two weeks. Earlier, the Federal Reserve dusted off a program from the 2008 financial crisis to get the short-term borrowing market working more smoothly.
Investors have been waiting for Washington to offer more aid for the economy. After flipping between gains and losses Tuesday morning, stocks turned decisively higher after the Federal Reserve revived a program first used in the 2008 financial crisis to help companies get access to cash for very short-term needs.
“There are still a lot of questions in the mind of the market as to what will be enough,” said Robert Haworth, senior investment strategist at U.S. Bank Wealth Management. “It’s a start, but there’s still a lot to be determined.”
Ultimately, investors say they need to see the number of infections slow before markets can find a bottom. Worldwide cases now exceed 190,000. In the San Francisco area, nearly 7 million people were all but confined to their homes in the nation's most sweeping lockdown.
Uncertainty about how badly the economy will be hit by the coronavirus has put the market on a roller coaster with steep losses giving way to sharp gains, only to get wiped out again, sometimes all in the same day.
“I don't think we're going to be able to trust movements in the market for some time,” said Tom Martin, senior portfolio manager with Globalt Investments.
Trading was unsettled around the world. European stocks swung from gains to losses and back to gains. South Korean stocks fell to their fifth straight loss of 2.5%, but Japanese stocks shook off an early loss to edge higher.
The Dow Jones Industrial Average see-sawed through the day. It went from up 600 points to down 300 to up 1,190 and then pulled back again. It ended the day up 1,048.86 points, or 5.2%, at 21,237.38. A day earlier, it lost nearly 3,000 after Trump said a recession may be on the way.
The S&P 500, which dictates the movements of workers' 401(k) accounts much more than the Dow, is still 25.3% below its record set last month. It’s close to where it was at the start of 2019, before one of the best years for stocks in decades.
Stocks have had a few rebounds since the market began selling off in mid-February on worries that COVID-19 will slam the economy and corporate profits. But all have ended up short-lived. The S&P 500 has had four days in the last few weeks where it surged more than 4%, something that did not happen at all last year. Each time, it has slumped more than 2.8% the following day.
Stock indexes bounced around in early trading Tuesday as investors try to regroup from a punishing day of losses.
Before Trump’s announcement, markets remained highly volatile a day after their worst loss in three decades as traders remained uncertain about how badly the coronavirus will hit the economy.
The Dow Jones Industrial Average jumped more than 600 points in early trading, fell 200, then was nearly unchanged after the first half-hour of trading. It lost nearly 3,000 points a day earlier after President Donald Trump said a recession may be on the way.
The Trump administration is proposing a roughly $850 billion stimulus plan to help the economy, including relief for small businesses and the airline industry, as well as a tax cut for wage earners, sources told The Associated Press.
The travel industry has been among the industries hardest hit by the outbreak, as planes sit grounded and hotels and casinos shut their doors. Some economists say the global recession has already begun.
The S&P 500 jumped as much as 3.2% in the first minutes of trading, but the gains quickly vanished and the index was up 0.1% at midmorning.
Trading is unsettled around the world. European stocks swung from gains to losses. South Korean stocks fell to their fifth straight loss of 2.5%, but Japanese stocks shook off an early loss to edge higher.
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Stocks have had a few rebounds since the market began selling off in mid-February on worries that COVID-19 will slam the economy and corporate profits. But all have ended up short-lived. The S&P 500 has had four days in the last few weeks in which it surged more than 4%, a remarkably large amount in normal times, and has slumped more than 2.8% the following day each time.
The S&P 500 is nearly 30% below its record set last month and is back to where it was in late 2018, erasing most of the best year for stocks in decades.
The big question for investors is when the new coronavirus will slow its spread, and when the economy can begin to recover from shutdowns affecting a growing list of industries by the day, from airlines to restaurants.
The virus has spread so quickly that its effects haven’t shown up in much U.S. economic data yet. A report Monday about manufacturing in New York state was the first piece of evidence that manufacturing is contracting due to the outbreak. On Tuesday, a report showed that retail sales weakened in February, when economists had been expecting a gain.
“The global recession is here and now,” S&P Global economists wrote in a report Tuesday.
They say initial data from China suggests its economy was hit harder than expected, though it has begun to stabilize. “Europe and the U.S. are following a similar path,” the economists wrote.
