Stocks rebounded Friday on hopes for a coronavirus aid package from Washington after Wall Street’s worst day since the “Black Monday” crash of 1987.
The Dow Jones industrial average jumped 750 points, a day after plunging 2,352 points, or 10%, for its worst loss since its nearly 23% drop on Oct. 19, 1987.
The Standard & Poor’s 500 surged 4%. The broad index tumbled more than 20% from its February record Thursday, sliding into a bear market and officially ending Wall Street’s historic 11-year bull market run.
House Speaker Nancy Pelosi and the Trump administration hoped to announce agreement Friday on a virus aid package to reassure anxious Americans by providing sick pay, free testing and other resources in an effort to calm teetering financial markets and the mounting crisis.
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Treasury Secretary Steve Mnuchin struck a positive tone Friday morning, saying a deal on a virus response package with Congress was imminent.
“We’re very close to getting this done,” he told CNBC.
The rout has come amid cancellations and shutdowns across the world, including Trump’s suspension of most travel to the U.S. from Europe. Worries have grown that the White House and other authorities around the world can’t or won’t counter the economic damage from the outbreak any time soon, threatening to end the decade-long economic expansion.
The coronavirus has infected around 128,000 people worldwide and killed over 4,700. The death toll in the U.S. climbed to 39, with over 1,300 infections.
“The recent shocks to the global economy are unprecedented,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a note. “While we are still projecting modest growth in the coming months, the impact of the coronavirus threatens the longest expansion in U.S. history.”
In both cases in 2020 and 1987, the economy was at or near full employment and generally healthy going into the crash. After the 1987 crash, there were widespread calls for an imminent recession as there are today, but that didn’t play out. The stock market recovered by almost 30% from its low within the next year and rose to a fresh high within about 18 months.
“Who knows how the contemporary crisis will play out, but it is worth thinking about its similarity to another quick moving and very scary market collapse when a recession did not occur,” Jim Paulsen, chief investment strategist for Leuthold Group, said in a note.
Global markets were mixed on Friday the 13th in most markets. In Europe, France’s CAC 40 jumped 6%, while Germany’s DAX rose 5%. Tokyo’s Nikkei 225 fell 6%. Sydney’s S&P ASX rose 4.4% and the Shanghai Composite declined 1.2%. In Hong Kong, the Hang Seng lost 1.1%.
Contributing: The Associated Press