U.S. stocks post biggest one-day gain since 2008 after Trump declared national coronavirus emergency

U.S. stocks posted their biggest daily gains since October 28, 2008, after President Trump declared a national emergency to tackle the coronavirus outbreak, a day after the Dow Jones and S&P 500 indexes suffered their biggest plunge in a day since the October 1987 crash.

The national emergency declaration frees up $ 50 billion in funds to help contain the COVID-19 pandemic, but financial market conditions are expected to remain volatile in the wake of this week’s global carnage.

How have the markets behaved?

The Dow Jones Industrial Average DJIA,
+ 0.44%
jumped 1,985 points, or 9.4%, to 26,79.16, while the S&P 500 SPX Index,
+ 0.57%
rose 230.38 points, or 9.3%, to close at 2,711.02. The Nasdaq COMP Composite Index,
+ 0.74%
gained 673.07 points, or 9.4%, to end at 7,874.88.

On Thursday, the Dow Jones and S&P 500 suffered their worst day since the Black Monday crash of October 19, 1987. The Dow plunged 2,352.60 points, or 10%, to end at 21,200.62. The S&P 500 lost 9.5%, or 260.74 points, to close at 2,480.64. The Nasdaq tumbled 9.4%, or 750.25 points, to end at 7,201.80.

The last time the S&P 500 recorded consecutive 9% moves in October 1929, and the last time the Dow recorded consecutive 9% moves, was February 13, 1932.

For the week, the Dow Jones fell 10.4%, the S&P 500 index was down 8.8%, while the Nasdaq fell 8.2% weekly.

What drove the markets?

President Trump declared a national emergency on Friday afternoon, opening a $ 50 billion funding tap to fight the coronavirus pandemic, while stepping up testing and expanding the capacity of hospitals and doctors to provide treatment for disease.

“It will pass and we will be even stronger for it,” Trump said at an afternoon White House press conference, flanked by heads of major U.S. pharmaceutical retailers and suppliers.

“I think they will do everything they can to prevent the economy from falling hard because of this,” Bruce Bittles, chief investment strategist at RW Baird & Co., said in an interview with MarketWatch, at the continuation of the declaration.

“I think there are a lot more tax measures that you will see next week,” he said.

Trump also said interest payments would be waived on the government’s share of the nearly $ 1.6 trillion stack of student debt and that quantities of strategic crude oil reserves would be purchased at significantly lower prices recently. . “We’re going to fill it to the top,” Trump said of the reservations.

See: Trump declares national emergency over coronavirus, putting more aid on the line

House Speaker Nancy Pelosi told Democrats after the bell on Friday that she had reached a deal with the White House on a coronavirus relief plan, with a vote to pass the bill expected Friday night. The infectious disease was first identified in Wuhan, China, in December and has infected around 128,000 people worldwide.

US Treasury Secretary Steven Mnuchin also said on Friday the government would use all its tools to support the functioning of the funding market, while the Federal Reserve said it would increase its monthly purchases of Treasury securities, an effort aimed at getting banks to extend credit to businesses and beyond.

“The Fed did two things. It has offered $ 1.5 trillion in medium-term loans to dealers, which does not appear to be in great demand, ”Guy LeBas, chief fixed income strategist at Janney Montgomery Scott told MarketWatch. “And the Fed has ramped up its regular monthly purchases of treasury bills.”

Meanwhile, the Bank of Canada urgently cut its benchmark rates by 50 basis points on Friday to 0.75%, ahead of the expected announcement of a massive fiscal stimulus package for the country, as its citizens were asked to postpone or cancel all non-essential out-of-town travel. the country in order to contain the pandemic.

Economists at JPMorgan & Chase Co. JPM,
said they now expected to see a “new” pandemic-driven global recession, with two consecutive quarters of negative growth, but did not expect an official slowdown to be declared.

Still, investors in credit were cautious, awaiting further instructions from the government on the additional help it could offer to industries and markets shattered by the epidemic.

“I think people are, if they don’t have to sell, they’re not going to sell in this weakness,” said Jim Gubitosi, co-director of investments at Income Research + Management in Boston, in an interview with MarketWatch. “The general idea is that we are going to be in a rough time for a while, but hopefully in the end there will be a lot of monetary and fiscal stimulus that go into effect at some point.”

Stocks had plunged Thursday as liquidity fears joined with the coronavirus pandemic and its effects on the economy in shaking investors.

Which companies were the center of attention?

Airline inventories increased, with Delta Airlines
+ 0.28%
gaining 4.7% after the carrier said it would cut capacity by 40% and cancel flights to Europe. United Airlines
+ 0.40%
stocks rose 4.6%. American Airlines
gained 6.4%.

Oracle Corp.
+ 1.50%
earnings released Thursday night showed the best revenue growth in nearly two years. Shares jumped 20.4%.

Actions of Norwegian Cruise Line
gained 15% after suspending cruises until April 11.

What have other markets done?

Asian markets fell sharply on Friday. Nikkei NIK from Japan,
fell 6.1%, while the South Korean Kospi 180721,
lost 3.4%, each posting their worst weekly losses since October 2008, according to Dow Jones Market Data. London stocks rebounded on Friday, but had the worst weekly performance since the 2008 crisis.

Oil futures ended slightly higher on Friday after a brutal week. Crude West Texas Intermediate for delivery in April US: CLJ20
ending 0.7% to settle at $ 31.73 a barrel, but posted a massive 23% loss for the week.

Gold futures came under further pressure on Friday, potentially as investors sell what they can to cover losses. April or US: GCJ20
fell $ 73.60, or 4.6%, to settle at $ 1,516.70 an ounce on Friday, while prices for the most active contract fell 9.3% for the week, data showed from FactSet.

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