Stocks notch one of their best days ever, with the Dow skyrocketing more than 11 percent
By Rachel Siegel and Thomas Heath, Washington Post
March 24, 2020 at 4:01 p.m. EDT
Stocks posted one of their best days ever on Tuesday, a sign of investor belief that Congress has no alternative than to pass a $2 trillion rescue of a U.S. economy that is on life support.
The massive stimulus is designed to be a lifeline to Americans and their employers until the coronavirus is brought under control and the country returns to some semblance of normalcy. The Federal Reserve signaled the gravity of the situation Monday when, in an unprecedented move, the central bank said it would spend whatever it takes to preserve the U.S. financial system.
Markets starved for good news shot upward Tuesday on faith that the stimulus was almost a given. The Dow Jones industrial average surged more than 2,000 points, or 11 percent, and pulled itself back above the 20,000 mark. The Dow finished the day at 20,704, its best day since 1933 and fourth best ever. The Standard & Poor’s 500 Index jumped 9 percent to 2,446. That is the broad market’s best day since 2008. The tech-heavy Nasdaq composite jumped more than 8.1 percent.
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“It’s too early to be blindly optimistic, but the size and pace of the policy responses to this crisis are very encouraging,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments. “This is not a time to be heroes calling a market bottom, but we are keeping a close eyes on indications of light at the end of the tunnel.”
All 11 S&P sectors were positive, led by a beaten-down energy sector that had lost half of its value this year due to a collapse in oil prices. Energy posted a nearly16 percent gain, led by oil giants such as Chevron. Several oil companies, including BP, saw shares spike after companies said they would tighten their belts in the wake of the rock-bottom oil prices.
Boeing, Home Depot, American Express, JP Morgan and Walt Disney — most of whom have been savaged by the coronavirus restrictions — had big days on the Dow as optimism over the stimulus took hold. American Airlines led the airlines sector with a 35 percent jump. The airline industry is anticipating a massive aid package from the stimulus.
Some of the buying came on the heels of slim-but-positive news that parts of the world were making strides against the coronavirus.
“The decline in the growth of virus cases in Italy is very encouraging because it gives the U.S. a line of sight into what the other side of this crisis might look like,” Goodwin said.
The eventual exit from the various lockdowns in the U.S. and across the world is starting to enter the national discussion. Most health experts have said it is going to take several weeks or even months of people staying home to significantly contain the spread of the disease.
Dr. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, said in an NBC interview last week that “I cannot see that all of a sudden, next week or two weeks from now, it is going to be over. I don’t think there is a chance of that.”
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Analysts, economists and corporate leaders are saying that even the beginnings of a plan would help. President Trump said Tuesday that he would like to see the economy reopened by Easter.
“Beijing announced that its lockdown on Hubei province will be lifted on April 8,” said David Rosenberg of Rosenberg Research. “The case count there has plunged significantly. Korea is in such good shape it is now exporting masks. There seems to be a light at the end of the dark tunnel in Italy too. And here at home, President Trump is talking openly about establishing a balance between health and wealth.”
The turnaround follows a volatile session Monday that sent markets plunging after the Senate twice failed to advance the coronavirus stimulus bill. Now, striking positive and optimistic tones, legislators are hashing out remaining discussions so that a vote may come to pass by Tuesday night.
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