JOIN USWall Street bounces on hopes of $2 trillion stimulus, Boeing boost
Wall Street bounced from three-year lows on Tuesday on hopes of a major fiscal stimulus to blunt the economic damage from the coronavirus, while Boeing helped the Dow surge 1,400 points on signs that its grounded jet could fly by the middle of the year.
All three main U.S. stock indexes jumped more than 5%, recovering from a brutal selloff in the previous session as the virus outbreak forced entire nations to shut down.
The benchmark S&P 500 has lost more than $9 trillion in value from its mid February record high, while the Dow Jones has erased over three years of gains in one month.
The 7% jump in the blue-chip index on Tuesday put it on pace for one of its best days in the last 12 years, second only to a 9.4% jump from last week.
Investors have pinned their hopes on the U.S. Senate passing a $2 trillion stimulus bill, aimed at providing financial aid to Americans out of work and help distressed industries.
"People woke up this morning to realize that legislation will be passed. There is a plan, and the world will continue going on tomorrow and the next day, the next week," said Jake Dollarhide, chief executive officer at Longbow Asset Management in Tulsa, Oklahoma.
A separate proposal in the U.S. House of Representatives to grant airlines and contractors a $40 billion bailout lifted the S&P 1500 airlines index by 15.7%.
Boeing, once a symbol of U.S. manufacturing strength, jumped 17% after Chief Executive Dave Calhoun said the planemaker expected the 737 MAX jet to return to service by mid-year. It has lost nearly two-thirds of its value so far this year.
Meanwhile, traders remained doubtful of a lasting recovery in financial markets without evidence of a peaking in the number of new COVID-19 cases.
"What we don't know at this stage is how long it will take to contain the virus...and what kind of damage that will do to both populations and economies," said Andy Scott, associate director at Chatham Financial in London
Data on Monday showed U.S. business activity hit a record low in March, bolstering views the economy was already in what Longbow Asset Management's Dollarhide called "a government mandated recession".
Still, there were broad gains on Wall Street as the S&P energy index rose nearly 10%, the most among the 11 major sectors, tracking a surge in oil prices.
At 11:13 a.m. ET the Dow Jones Industrial Average was up 1,355.29 points, or 7.29%, at 19,947.22, the S&P 500 was up 147.82 points, or 6.61%, at 2,385.22 and the Nasdaq Composite was up 393.96 points, or 5.74%, at 7,254.64.
Advancing issues outnumbered decliners by a 11.50-to-1 ratio on the NYSE and a 6.60-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and one new low, while the Nasdaq recorded three new highs and 47 new lows.