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Stocks surge 7% as hopes build for US coronavirus stimulus

By Associated Press Reporter

Stocks on Wall Street joined a worldwide rally Tuesday as optimism rose, for one morning at least, that government officials and central banks are unleashing enough aid to ease the economic pain caused by the coronavirus outbreak.

The S&P 500 surged more than 6%, and the Dow jumped nearly 1,400 points in morning trading as a wave of buying interrupted what has been a brutal month of nearly non-stop selling.

Despite the rally, investors were far from saying markets have hit bottom.

Rallies nearly as big as this have punctuated the last few weeks, and none lasted more than a day.

Tuesday’s optimism was born in part out of signs that Congress and White House officials may reach an agreement soon on nearly two trillion dollars (£1.72 trillion) in aid for the economy, though some issues remain.

Investors have been frustrated waiting for the US government to do what it can to help the economy, which is shutting down by the day.

The Federal Reserve is doing nearly all it can, and it launched its latest round of extraordinary aid Monday.

The buying circled the world. South Korean stocks surged 8.6%, Germany’s market jumped 7.3% and Treasury yields rose in a sign that investors are feeling less fearful. Even crude oil, which has more than halved this year, rose.

“I don’t think there’s any more confidence in the fundamental outlook, but the fact that we’re making progress is good news,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.

Many economists say a recession is now inevitable (AP)

“It’s sort of like, keep the patient alive in the emergency room so you can provide some treatment options.”

Ultimately, investors say they need to see the number of new infections peak before markets can find a floor.

The S&P 500 was up 6.5%, as of 11am Eastern time. The Dow Jones Industrial Average rose 1,356 points, or 7.3%, to 19,942 and the Nasdaq was up 5.5%.

Governments and central banks in countries around the world are unveiling unprecedented levels of support for their economies in an attempt to limit the scale of the upcoming virus-related slump.

Germany, a bastion of budgetary discipline, also approved a big fiscal boost.

Markets rose even as more dismal data came in about the global economy.

In the United States, a preliminary reading on business activity in March showed the steepest contraction on record, going back to 2009. Reports were also gloomy for Europe.

A further boost has come from the news that China is preparing to lift the lockdown in Wuhan, the epicentre of the outbreak, and from Italy reporting a reduction in the number of new cases and coronavirus-related deaths.

“It’s still early days, of course – perhaps investors can start to envisage life beyond the coronavirus,” said Craig Erlam, senior market analyst at OANDA Europe.