Dow, S&P 500 close higher on stimulus hopes, Nasdaq down

Marco Green
March 26, 2020

The Dow Jones Industrial Average soared more than 11 per cent on Tuesday in its biggest single-day percentage gain since 1933 and the benchmark S&P 500 jumped 9.4 per cent ― its tenth biggest daily gain on record since a daily data series started in 1927.

Oil prices fell despite the massive pending USA economic stimulus package as the coronavirus pandemic hurt US fuel demand, with traders bracing for further declines. At its session high, the Dow was up more than 6% while the S&P 500 gained as much as 5.1%.

The S&P 500 remains down about 27% from its February record high, a loss of more than $7 trillion in stock market value.

White House and Senate leaders agreed to a massive $2 trillion coronavirus stimulus bill in the middle of the night.

"Fiscal stimulus is absolutely necessary because it directly effects the consumer and consumer spending and consumer confidence is what's driving the US economy", said Nancy Perez, senior portfolio manager at Boston Private Wealth in Miami. The Federal Reserve and central banks are also offering tremendous support by cutting interest rates and supporting lending markets, but investors say they need to see the number of new infections peak before they can feel comfortable knowing how deep the looming economic downturn will be.

"What the fiscal and monetary stimulus has done is to allow the market to recover", said Justin Hoogendoorn, head of fixed income strategy at Piper Jaffray in Chicago. "It's wonderful to see a big uptick and the market needed it".

For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks.

With widening swaths of the economy shutting down and layoffs mounting, economists are sure a steep drop-off is coming. What's unsure is how long it will last.

The dollar and global equity markets marched higher on Wednesday and were poised for a second day of gains following a coronavirus-induced selloff, though investors remained concerned about the pandemic's economic impact.

The benchmark S&P 500 is still almost US$8 trillion below its mid-February high, and investors expect more sharp swings.

The uncertainty has carried over even to trading within a certain day or a certain hour.

At the close, Dow +2.4% and S&P 500 +1.1%, but the Nasdaq ended slightly in the red, -0.4%.

Royal Caribbean Cruises and Norwegian Cruise Line Holdings each rallied about 23%. France's CAC 40 rose 4.5% and Germany's DAX rose 1.8%.

Boeing, once a symbol of US manufacturing strength, jumped 17% after Chief Executive Officer Dave Calhoun said the company still expected a "mid-year" return to service of the 737 MAX aircraft.

Treasury yields were holding relatively steady.

Other reports by Click Lancashire

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