The Dow soared more than 2,000 points on Tuesday in its strongest one-day performance since 1933 as US lawmakers neared a deal to inject nearly $2 trillion of aid into an economy ravaged by the coronavirus.
All three main US stock indexes rebounded strongly from Monday’s brutal selloff as the coronavirus outbreak forced entire nations to shut down.
On Tuesday, the Dow burst 11.4% higher, while the more closely followed S&P 500 index leapt 9.4% as a wave of buying around the world interrupted what has been a brutal month of nearly nonstop selling.
Despite the gains, 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.
Both Democrats and Republicans said Tuesday they’re close to agreeing on a massive economic rescue package, which will include payments to U.S. households and aid for small businesses and the travel industry, among other things. A vote in the Senate could come later Tuesday or Wednesday.
Investors have been waiting in frustration for such aid, particularly as the Federal Reserve has done nearly all it can to sustain markets, including its latest round of extraordinary aid launched Monday.
‘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.
‘It’s sort of like, keep the patient alive in the emergency room so you can provide some treatment options.’
The Dow rose 2,112.98 points, its biggest point gain in history, to 20,704.91. The S&P 500, which is much more important to most 401(k) accounts, rose 209.93, or 9.4%, to 2,447.33 for its third-biggest percentage gain since World War II. The Nasdaq composite jumped 557.18 points, or 8.1%, to 7,417.86.
The market has seen rebounds like this before, only for them to wash out immediately. Since stocks began selling off on February 20, the S&P 500 has had six days where it’s risen, and all but one of them were big gains of more than 4%. After them, stocks fell an average of 5% the next day.
Ultimately, investors say they need to see the number of new infections peak before markets can find a floor. The increasing spread is forcing companies to park airplanes, shut hotels and close restaurants to dine-in customers.
Economists are topping each other´s dire forecasts for how much the economy will shrink this spring due to the closures of businesses, and a growing number say a recession seems inevitable.
The New York Stock Exchange has been closed temporarily due to coronavirus fears
Trading has moved online indefinitely amid the coronavirus outbreak
The major US indexes jumped more than 5 percent in the first few minutes of trading on Tuesday
Some of the market’s areas hardest hit by the closures, though, led the way higher Tuesday as expectations rose for incoming aid from the U.S. government.
Norwegian Cruise Lines, MGM Resorts and American Airlines Group were all up at least 33%. Energy companies and banks were also strong, though all remain well below where they were a month ago.
Governments and central banks in other 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.
The gains came even as the first reports arrived showing how badly the outbreak is hitting 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.
‘Everyone was prepared for a set of shockers, and that is precisely what we got, but they are not a surprise,’ said Chris Beauchamp, chief market analyst at IG. ‘It is at times like this that the market´s propensity to look forward is demonstrated most effectively.’
More dour data is nearly assuredly on the way. On Thursday, economists expect a report to show the number of Americans applying for jobless claims easily set a record last week. Some say the number could be way beyond 1 million, amid a wave of layoffs, topping the prior record of 695,000 set in 1982.
Helping to lift sentiment in markets is news from China that it is preparing to lift the lockdown in Wuhan, the epicenter 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. ‘That could make stocks look a little more attractive, although anyone jumping back in now will need to have nerves of steel.’
Despite Tuesday’s big gains, it’s no time to get complacent, said Adam Taback, chief investment officer for Wells Fargo Private Bank.
‘We would caution that the danger is not all behind us at this point,’ he said. ‘We still have not seen numbers that give us an indication of just how bad things are. Today was a good day, but we would not necessarily see this as turnaround time.’
USPS could shut down by June: Americans may not be able to get their mail-order prescription drugs, 25% of voting ballots and Social Security checks due to coronavirus
The United States Postal Service could grind to a halt by June after a ‘drastic’ reduction in mail going through the system amid the coronavirus pandemic due to a staffing shakeup and state lockdowns.
Customers have been urged to stay at home and businesses have shuttered to prevent the spread of the illness. Additionally, with at least two dozen employees testing positive for COVID-19, colleagues have been using sick days and annual leave to recover, avoid being infected or to take care of vulnerable loved ones.
With the Postal Service ending 2019 in $11billion debt House Democrats have called for $25 billion relief from the Take Responsibility for Workers and Families Act so more than a billion mail-order drug prescriptions per year, 25 percent of voting ballots, and Social Security checks can be delivered.
With the current borrowing for the Postal Service capped at $3billion, a new deal could raise that to $15billion and additionally eliminate the debt believed to be influenced by a decline in demand due to the digital age.
USPS has seen a drastic reduction in mail amid the coronavirus pandemic and could collapse by June
‘The Postal Service is in need of urgent help as a direct result of the coronavirus crisis,’ Oversight Committee Chairwoman Carolyn Maloney (D-N.Y.) said in a joint statement with Rep. Gerry Connolly (D-Va.), Chairman of the Subcommittee on Government Operations.
‘Based on a number of briefings and warnings this week about a critical fall-off in mail across the country, it has become clear that the Postal Service will not survive the summer without immediate help from Congress and the White House.’
Funds would come from the House’s $2.5trillion coronavirus relief package, which is said to be nearing a deal.
Individuals as well as businesses are contributing to the drop-off in mail going through the system. Both could suffer as a result too.
Currently mail on the delivery route for closed businesses is being returned to the USPS delivery unit and will be held for 10 days. Customers can request a temporary hold for their mail up to 30 days.
Those who collect from a Caller Box can contact their local office to arrange pickup and the USPS is contacting high volume customers to discuss pickup options too.
Issues could be partially resolved by operating flexible worker schedules and setting up ‘temporary delivery points’.
USPS is known for providing liberal leave and is working with postal unions to temporarily expand options for employees as the workforce suffers.
Additionally, since 2006, USPS – an independent agency within the government – has also had to pay at least $5.5 billion annually to pre-fund retiree benefits.
Meanwhile Americans complying with state or municipality shelter-in-place orders rely on the leading delivery service for many online orders.
Under a new Act, Medical deliveries would become a priority as the virus prohibits vulnerable groups and those living in rural areas from getting what they need. The Representatives warned in their statement it could have ‘grave’ and ‘dire’ consequences for those people.
The USPS now has a dedicated COVID-19 Command Response leadership team that is focusing on employee, operational, business, and customer continuity, it said Sunday.
It could ease the pressure off delivery workers and reassure customers there’s no need to fear contracting the novel coronavirus on the surface of mail.