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U.S. Stocks Rebound on Hopes for Virus Stimulus: Markets Wrap

Jeremy Herron and Vildana Hajric
U.S. Stocks Rebound on Hopes for Virus Stimulus: Markets Wrap

(Bloomberg) -- U.S. rallied back from the worst rout since the financial crisis on expectations the Trump administration will implement stimulus measures to counter the economic impact from the coronavirus. Treasuries fell and oil jumped.

The S&P 500 rallied 4.9% as investors digested a trickle of news that President Donald Trump and his team are looking at measures including cutting payroll taxes and aiding ailing businesses like airlines and cruise operators. Stocks whipsawed throughout another wild day on Wall Street, wiping out a gain of 3.5% to turn negative before a furious rally in the final two hours of trading delivered the biggest gain since December 2018.

“It’s market March Madness at the moment, complete with surprising losses, upsets, and comebacks,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial.

Among the major moves:

The S&P 500 rose 4.9% as of 4 p.m. in New York.Airlines rallied after Trump’s comments. He did not offer details on what he’d do for the group that’s among the hardest hit, as event cancellations mount.Energy companies jumped 5% with oil surging.Apple spiked higher by 7.2%.The Cboe Volatility Index fell below 50.The 10-year Treasury yield topped 0.75%. German 10-year rates stood at -0.79%West Texas Intermediate surged 11% to climb above $34 a barrel.

Volatility continued to grip global financial markets rattled by the virus and an all-out oil price war. U.S. stocks plunged the most since 2008 on Monday, and further selling took futures 20% from records before the rally sparked by Trump’s promise for action Tuesday. The S&P 500 is down 15% from its record. So far, the president has criticized the Federal Reserve and Democratic congressional leaders without providing details of his proposals.

With markets on edge, signs had started to mount that governments around the world are awaking to need for stimulus measures to combat the virus that is threatening to plunge the global economy into recession.

At the same time, measures to contain the coronavirus continue to undermine prospects for corporate earnings, and raise the danger of a funding crisis, while the oil price crash threatens a swath of defaults among producers. Italy added nationwide travel restrictions to its effective lockdown of the northern region of the country.

“A strong rebound today, if it in fact holds, does not mean the volatility, or even the worst, is behind us. Rather, investors should expect continued gyrations both up and down until there is greater certainty on coronavirus,” said Greg McBride, chief financial analyst at Bankrate.com.

Elsewhere, Japanese government bonds tumbled after an auction of five-year debt flopped.

Here are some key events coming up:

The European Central Bank’s policy decision comes Thursday amid expectations it may ease policy.The U.K. Chancellor of the Exchequer unveils the government’s 2020 budget on Wednesday.The U.S. core consumer price index, due Wednesday, is expected to remain subdued in February.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

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