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Dow surges most since 2008 on hopes for stimulus
The S&P 500 rebounded from the lowest level since 2016, poised to notch a third straight Tuesday turnaround after starting the week with a rout. Senators are negotiating the final sticking points in a roughly $2 trillion stimulus bill to help the US economy get through the coronavirus pandemic, and House Speaker Nancy Pelosi said she was hopeful a deal could be reached today.
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A trader reacts as he works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 18, 2020. (REUTERS/Lucas Jackson )
U
S stocks rallied, with the Dow Jones Industrial Average up as much as 9.9 percent for the first time since 2008, as investors rediscovered some appetite for risk with Congress looking close to an unprecedented spending bill to prop up the slumping economy. The dollar halted a 10-day rally.
The S&P 500 rebounded from the lowest level since 2016, poised to notch a third straight Tuesday turnaround after starting the week with a rout. Senators are negotiating the final sticking points in a roughly $2 trillion stimulus bill to help the US economy get through the coronavirus pandemic, and House Speaker Nancy Pelosi said she was hopeful a deal could be reached today.
“Any sign of positive news coming out of Washington or the different sides coming together creates a bit of positive sentiment across markets,” said Peter Essele, head of portfolio management for Commonwealth Financial Network.
The Stoxx Europe 600 Index also surged, led by insurers and industrial companies, even as data began to show the extent of economic damage to the region from the coronavirus pandemic. Benchmarks across Asia jumped, with Korea’s index soaring almost 9% after the government announced measures to stabilize markets.
The dollar slumped against developed and emerging currencies alike, in a tentative sign of reduced stress after the greenback’s steepest appreciation since the global financial crisis and longest winning streak since 2012. European bonds tracked Treasuries lower.
About $26 trillion has evaporated from equity markets since mid-February, and investors have been left sifting the wreckage and weigh the chances of a lasting rebound. On the one hand, Wall Street has begun to argue that liquidations are nearing an end with real-money investors like pension funds ready to step in, and there are signs of improvement in some of world’s regions that were hardest-hit by the virus. On the other, the number of infections globally continues to accelerate and many of the largest economies are grinding to a halt.
Tuesday’s gain in risk assets follows an unprecedented move by the Federal Reserve to backstop large swaths of the financial system. Still, key gauges of US manufacturing and services in March fell the most on record, suggesting the deep toll the pandemic has already taken.
“Sentiment has improved, but to call it a turning point is too strong a word for now,” said James McCormick, global head of desk strategy at NatWest Markets. “It is more of a tug-of-war. Policy bazooka is in place, but will be fighting against very weak data and still worrying trends on Covid-19 data. We are more neutral on risk assets now.”
Elsewhere, emerging-market stocks jumped alongside their currencies. Gold extended recent a recent surge and industrial metals rallied.
