U.S. stocks and oil prices recovered 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 700 points, after plunging 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 2.5% Tuesday, after posting its worst one-day percentage drop since October 2008. The index is off 17% from its Feb. 19 record.
“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.
Stocks received a boost 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.
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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.”
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 also 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.
Benchmark U.S. crude gained 3.2%, or $1.00, to $32.13 per barrel in electronic trading on the New York Mercantile Exchange. It lost 25% on Monday to $31.13 per barrel. Brent crude, the standard for international oil prices, gained 5.1%, or $1.68, to $36.04 per barrel in London.
The yield on U.S. Treasury bonds edged up to 0.67% after falling as low as 0.5% as investors shifted money into safe-haven assets. It had never been below 1% until last week.
In Europe, London’s FTSE 100 rose and Frankfurt’s DAX advanced TK%. The CAC 40 in France gained 1.4%. The Shanghai Composite Index rose and the Nikkei 225 in Tokyo advanced. Hong Kong’s Hang Seng climbed 1.4%.
Contributing: The Associated Press