US stocks rebounded somewhat on Tuesday from the previous day’s historic crash on renewed hopes for government stimulus to combat the coronavirus.
The Dow Jones industrial average ended the day up close to 1,200 points after plummeting more than 2,000 points on Monday in its worst point decline ever.
The bounce didn’t come easy, however. Stocks ricocheted in frenetic fashion on Tuesday, with the Dow rising more than 900 points in early trading on stimulus hopes — only for those gains to be erased amid concerns that the White House stimulus plan remained vague.
Hopes of tax cuts and other economic incentives waned after CNBC reported that the White House was not ready to announce a specific economic plan. “A lot of details need to be worked out,” one official told the network.
But investors lifted stocks once again leading into the close amid reports that Trump had pitched a 0 percent payroll tax rate during a meeting with Republican lawmakers on Capitol Hill on Tuesday. The proposed tax cut would last at least through the rest of this year, an anonymous White House official told CNBC.
The Dow ended higher 1,167.14 points, or 4.89 percent, to 25,018, while both the S&P 500 and Nasdaq closed higher 4.9 percent, to 2,882.23 and 8,344.25 respectively.
A recovery in crude oil prices also helped lift spirits. Brent crude futures recently jumped 8.3 percent, to $37.2 a barrel, on reports that Russian officials may be open to cooperating with the Organization of the Petroleum Exporting Countries after a breakdown in relations between Russia and Saudi Arabia.
On Monday, the Dow shed more than 2,000 points and the S&P suffered its worst day since December 2008 after a standoff between Russia and Saudi Arabia caused crude oil prices to sink. Saudi Arabia threatened to boost production after Russia rejected of an OPEC proposal to cut back on global oil production by as much as 1.5 million barrels a day.
The nascent oil price war only served to exacerbate fears about the coronavirus outbreak damaging the global economy.
Indeed, Wall Streeters ascribed Tuesday’s rally to a period of relative calm in a period of endlessly distressing news.
“Yesterday was all about the compounding of so much different bad news,” said Nasdaq Chief Economist Phil Mackintosh. “Today, there was some growth in virus cases, but really no extra bad news.”
And traders noted that there’s no telling what may come on Wednesday. “It’s premature to say we’re out of this,” said Sahak Manuelian, managing director and head of equity trading at Wedbush Securities.
“I think people just want to see a better handle on who’s infected, who’s not, how many people are infected, do we have enough tests out there — which we currently don’t,” Manuelian added.
With reporting by Thornton McEnery