U.S. stocks rebounded Tuesday, a day after crude suffered a historic rout while the broader stock market recorded its worst day since the financial crisis.
The Dow Jones industrial average jumped 800 points in a wild trading session that saw the blue-chip average swing 1,106 points from its high to its low.
Tuesday’s moves came after the Dow plunged more than 2,000 points on Monday. A free fall in oil prices and mounting coronavirus cases rattled jittery investors a day earlier and pushed major indexes to the edge of a bear market, or a drop of 20% from a recent peak.
The Standard & Poor’s 500 climbed 3.9% Tuesday, after the broad index posted its worst one-day percentage drop since October 2008 on Monday. The index is off about 19% from its Feb. 19 record. The technology-heavy Nasdaq Composite climbed 1.3%.
Dizzying swings have been relentless in markets the last few weeks. Stocks had a couple days last week where they rose more than 4%, only for the bottom to give out again.
“We’re in a volatile period, and investors seeking long-term growth will benefit from staying calm and waiting for the current downturn to pass,” Michael Hanson, senior vice president of research at Fisher Investments, said in a note.
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Since U.S. stocks set their record high just a few weeks ago, traders have crossed over from dismissing the economic pain created by COVID-19 — thinking it’s similar to the flu and could stay mostly contained in China — to being in thrall to it — worrying that it may cause a worldwide recession.
Stocks had received a brief boost in morning trading after President Donald Trump said late Monday he will seek financial relief for workers and businesses affected by the coronavirus outbreak, as new cases were reported across the country. The number of confirmed worldwide cases was approaching 115,000 early Tuesday. The death toll from the virus has now topped 4,000 — including 26 in the U.S.
Trump’s comment that he will seek relief for workers gave some investors an excuse to resume buying.
“This is not like the financial crisis where we don’t know the end is in sight,” said Treasury Secretary Steven Mnuchin. “This is about providing proper tools and liquidity to get through the next few months.”
Stocks were poised to move higher Tuesday after Monday’s brutal declines, analysts said. One reason why stocks were poised to move higher: The biggest rebounds have historically occurred following sharp drops on Mondays, according to Bespoke Investment Group.
Since 1952, the S&P 500 index has dropped at least 5% on Mondays ten times, with yesterday’s 7.6% drop marking the eleventh time. Following all ten of those Mondays, the broad index has gained more than 2.2% the next trading day.
On Tuesday, oil prices recovered some of their losses. Crude plunged 25% on Monday after Russia refused to roll back production in response to virus-depressed demand. Saudi Arabia signaled it will ramp up its own output.
Brent crude, the international standard, rose $2.86, or 8.3%, to settle at $37.22 a barrel, while benchmark U.S. crude rose $3.23, or 10.4%, to $34.36 a barrel.
Perhaps the most notable move in markets Tuesday was that Treasury yields pushed higher. The bond market rang warning bells about the virus long before the stock market, and a rise in yields is a sign that fear has receded a bit.
The 10-year Treasury yield rose to 0.77% from 0.49% late Monday. A week ago, it had never been below 1%.
In Europe, London’s FTSE 100 fell 0.1% and Frankfurt’s DAX lost 1.4%. The CAC 40 in France fell 1.5%. The Shanghai Composite Index rose 1.8% and the Nikkei 225 in Tokyo advanced 0.8%. Hong Kong’s Hang Seng climbed 1.4%.
Contributing: The Associated Press