Wall Street roared back to life on Tuesday, rebounding from the brink of bear market confirmation as bargain-hunting and hopes of government stimulus calmed investors’ fears surrounding the coronavirus and growing signs of imminent recession.
All three major indexes jumped nearly 5 per cent the day after equities markets suffered their biggest one-day losses since the 2008 financial crisis.
Canada’s main stock index partially rebounded from the worst one-day decline in more than 30 years on the promise of fiscal stimulus by the U.S. and other governments and a lift in oil prices.
The S&P/TSX composite index closed up 443.85 points or 3.1 per cent to 14,958.09 after losing 1,660.78 points on Monday.
The Canadian dollar traded for 72.83 cents U.S. compared with an average of 73.54 cents US on Monday.
The April crude contract was up more than 10 per cent or US$3.23 at US$34.36 per barrel and the April natural gas contract was up 15.8 cents at US$1.94 per mmBTU.
The April gold contract was down US$15.40 at US$1,660.30 an ounce and the May copper contract was up 1.1 cents at US$2.52 a pound.
Still, the S&P 500 and the Nasdaq ended the session about 15 per cent below the record closing highs reached on Feb. 19. Sinking beyond the 20 per cent mark would confirm a bear market.
U.S. President Donald Trump said he will take “major steps” to allay market fears by asking Congress for a fiscal stimulus package to include a payroll tax cut, among other measures.
“Coming off yesterday, you’ve got short-term bargain-hunters coupled with potential fiscal stimulus hopes,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
“It may be the biggest benefit is not actually what’s getting done – it’s that there appears to be a plan,” Carlson added. “There does appear to be a willingness to do something, and that’s probably what’s helping the market.”
Market participants largely expect the U.S. Federal Reserve to cut interest rates for the second time this month at the conclusion of next week’s two-day monetary policy meeting.
Outside the United States, major world economies took steps to cushion the effects of the fast spreading COVID-19.
Global markets have been rattled in recent weeks by the rapidly spreading coronavirus, which has caused widespread supply chain disruption, hobbled the travel industry and prompted drastic containment measures in Italy and elsewhere.
Market uncertainties surrounding COVID-19 were exacerbated over the weekend as Saudi Arabia and Russia scrapped their supply pact and pledged to increase crude oil production.
But oil prices rebounded from Monday’s largest percentage drop since the 1991 Gulf War, with front-month Brent crude rising 10.0 per cent after Russia indicated it was open to talks with OPEC.
Energy stocks bounced back from their worst decline on record, advancing 5.0 per cent.
The Dow Jones Industrial Average rose 1,167.14 points, or 4.89 per cent, to 25,018.16, the S&P 500 gained 135.67 points, or 4.94 per cent, to 2,882.23 and the Nasdaq Composite added 393.58 points, or 4.95 per cent, to 8,344.25.
All 11 major sectors of the S&P 500 closed higher, led by tech and rate-sensitive financial shares.
Financials jumped 6.0 per cent after suffering their worst day in more than a decade as U.S. Treasury yields rebounded from record lows.
United Parcel Service Inc gained 6.5 per cent as Stifel upgraded its shares to “buy,” while Amazon.com Inc rose 5.1 per cent on Cowen & Co’s price target increase.
Shares of Chevron Corp and Marathon Oil Corp rose 5.3 per cent and 21.2 per cent, respectively, after the oil companies and their peers announced cost reduction efforts to combat plunging crude prices.
Advancing issues outnumbered declining ones on the NYSE by a 2.61-to-1 ratio; on Nasdaq, a 2.06-to-1 ratio favored advancers.
The S&P 500 posted three new 52-week highs and 100 new lows; the Nasdaq Composite recorded eight new highs and 578 new lows.
Volume on U.S. exchanges was 15.81 billion shares, compared with the 11.52 billion average over the last 20 trading days.
— With files by The Canadian Press