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Dow has biggest daily jump since 2009 as Wall Street buys the dip
The Dow Jones Industrial Average jumped 5.09 percent to end at 26,703.32 points, while the S&P 500 surged 4.60 percent to 3,090.23.
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Traders work on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, Feb. 26, 2020. (Bloomberg/Michael Nagle)
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he Dow Jones Industrial Average surged over 5 percent on Monday while the S&P 500 and Nasdaq each jumped more than 4 percent in a major rebound following last week’s steep sell-off sparked by fears about the coronavirus.
After the stock market extended gains in the session’s final minutes, the Dow wrapped up its strongest one-day gain since 2009, while the S&P 500 and Nasdaq each had their strongest one-day rise since December 2018.
That rally followed the US stock market’s worst week since the 2008 financial crisis, sinking into correction territory on Thursday due to fears of a recession resulting from the epidemic.
The S&P 500 remains down 8.7 percent from its Feb. 19 record high close. Many investors will consider the index to remain in a correction until it reclaims its high.
Apple jumped 9.3 percent in its largest one-session leap since 2008. The iPhone maker is still down nearly 9 percent from its record high close on Feb. 12.
Bank of Japan Governor Haruhiko Kuroda said on Monday that Japan’s central bank would take necessary steps to stabilize financial markets. That followed a similar move by Fed Chair Jerome Powell last Friday.
“We can shrug off an economic downturn, but if it starts to spill into companies’ capacity to pay their debts, then that creates deeper problems. But it seems to me like the central banks are linking arms to find a way to insulate the credit markets from economic uncertainty,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.
Traders see a 100 percent chance of a 50 basis point rate cut at the Fed’s March meeting, according to CME Group’s FedWatch tool.
The Dow Jones Industrial Average jumped 5.09 percent to end at 26,703.32 points, while the S&P 500 surged 4.60 percent to 3,090.23.
The Nasdaq Composite added 4.49 percent to 8,952.17.
Trading was very busy on US exchanges, with 14 billion shares changing hands compared with a 9.5 billion-share average for the last 20 days.
The S&P 500 information technology index jumped 5.7 percent in its strongest session since December 2018.
The Institute for Supply Management said domestic manufacturing activity barely expanded last month due to supply issues stemming from the virus outbreak.
“The Fed can cut rates all it wants, that is not going to put a person in a factory producing a product if that person is quarantined,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
“I don’t think (monetary policy) solves the problem ... This particular one is both supply and demand, it will help but it won’t fix the problem.”
Cancer drug developer Forty Seven Inc soared 62 percent after larger peer Gilead Sciences made a US$4.9 billion offer for the firm. Gilead jumped 8.71 percent.
Surgical mask maker Alpha Pro Tech Ltd tumbled 22 percent but remains up over 350 percent year-to-date.
Advancing issues outnumbered declining ones on the NYSE by a 4.32-to-1 ratio; on Nasdaq, a 2.69-to-1 ratio favored advancers.
The S&P 500 posted no new 52-week highs and 18 new lows; the Nasdaq Composite recorded 27 new highs and 149 new lows.
