U.S. stocks rebounded Tuesday after the White House laid out additional plans to help cushion the economy from the coronavirus pandemic.
President Donald Trump and Treasury Secretary Steve Mnuchin say they are exploring the idea of legislation that would include sending checks to Americans to help them manage through the economic impact of the virus disruptions.
The gains follow the market’s worst sell-off in more than three decades on Monday.
The Dow Jones industrial average climbed 1,048.86 points to close at 21,237.38. The Standard & Poor’s 500 rose 6% to finish at 2,529.19. Both averages had their worst day since the “Black Monday” stock market crash of 1987 the prior day.
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Monday’s 12% drop for the S&P 500 came as voices from Wall Street and the White House warned the coronavirus may drag the economy into a recession.
Stocks also got a boost after the Federal Reserve said it’s reviving a crisis-era source of funding for businesses that need short-term loans, a move aimed to counter the economic impact of the virus.
Stock futures stabilized Monday evening following news that the Trump administration plans financial support for airlines stricken by the outbreak and is pushing the Senate to enact a massive stimulus package to alleviate losses for businesses and individuals affected by the outbreak, which has infected more than 180,000 people worldwide.
The U.S. death toll hit 97, and there are more than 5,700 confirmed cases, according to the Johns Hopkins University data dashboard.
“There are monetary and fiscal policies that are being put in place to try to ease financial market concerns, but this is ultimately a health issue,” says Tom Myers, CEO and managing partner at Bordeaux Wealth Advisors. “We’re going to need to see data that shows the severity of this virus situation is abating and getting better. Markets are assuming the worst right now.”
The S&P 500 has shed 25% since setting a record less than a month ago, and it’s at its lowest point since the end of 2018. Monday’s precipitous losses accelerated in the last half hour of trading after President Donald Trump said the economy may be headed for a recession and asked Americans to avoid gatherings of more than 10 people.
The plunge came even though the Federal Reserve on Sunday rushed to announce a new round of emergency actions before financial markets opened for the week.
Layoffs from coronavirus almost certain
“There’s a lack of demand across so many industries, it’s almost certain that there will be layoffs throughout the economy,” says Stephen Guilfoyle, founder and president of Sarge986 LLC, a family-run trading operation.
In European trading, the CAC 40 in Paris rose 2.8% after the government announced $50 billion in aid for individuals and businesses. Germany’s DAX rose 2.3%. Britain’s FTSE 100 added 2.8%.
In Asia, the Nikkei 225 in Tokyo was virtually unchanged, while Hong Kong’s benchmark jumped 0.9%. The Shanghai Composite index dipped 0.3%.