Sunday January 24th, 2021 1:28PM

Stocks surge over 7% on building hopes for US virus stimulus

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — Stocks on Wall Street joined a worldwide rally Tuesday as optimism rose, for one day 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 7%, and the Dow jumped more than 1,500 points in midday trading as a wave of buying interrupted what has been a brutal month of nearly nonstop 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 the White House are nearing an agreement on close to $2 trillion in aid for the economy. Investors have been frustrated waiting for the U.S. 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 8.7% and Treasury yields rose in a sign that investors are feeling less fearful.

“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 market has seen rebounds like this before, only for them to wash out immediately. Since the market began selling off on Feb. 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.

“One of the things to be careful about is thinking this will be the panacea or that this fiscal response will be sufficient,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

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. Altogether, estimates suggest at least 10% of the U.S. economy is shutting down, according to Rob Sharpe, head of investments and group chief investment officer at T. Rowe Price.

The S&P 500 was up 7.3%, as of 11:45 a.m. Eastern time. The Dow Jones Industrial Average rose 1,543 points, or 8.3%, to 20,135 and the Nasdaq was up 6.7%.

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.

To support the economy while health experts work to corral the virus, the Federal Reserve on Monday pledged to buy as many Treasurys and mortgage-backed securities as it takes to keep lending markets working smoothly..

Investors are waiting for Congress and the White House to also do what they can. They debated through the weekend and Monday on a plan to send cash to households and help support the hard-hit travel industry, among other things. After negotiations dragged through the night, a Senate vote could come later Tuesday.

Governments and central banks in other countries around the world are also 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.

“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 that 725,000 Americans applied for jobless claims amid a wave of layoffs. Some say the number will be way beyond 1 million and far surpass the prior record of 695,000 set in 1982.

Analysts, meanwhile, are slashing their expectations for corporate profits, which are the lifeblood of the stock market. Credit Suisse cut its earnings forecast for S&P 500 companies this year by nearly a quarter and said this downturn could be steeper than the 2008 financial crisis, both for the contraction and for the ensuing recovery.

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.”

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. Those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems. Recovery could take six weeks in such cases.


AP Business Writer Joe McDonald contributed from Beijing.

  • Associated Categories: Associated Press (AP), AP National News, Top General short headlines, AP Online Headlines - Washington, AP Online Congress News, AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services
© Copyright 2021
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Stocks surge over 7% on building hopes for US virus stimulus
Stocks are jumping in midday trading on Wall Street Tuesday amid expectations that Congress is nearing a deal on a big coronavirus relief bill
11:57AM ( 9 minutes ago )
The Latest: NY Gov. Cuomo: Infection rate accelerating
New York Gov. Andrew Cuomo sounded his most dire warning yet about the coronavirus pandemic, saying the infection rate in New York is accelerating
11:46AM ( 20 minutes ago )
US manufacturing might vs virus; drinking at home
Manufacturers are reconfiguring operations to help produce desperately needed medical gear
11:42AM ( 24 minutes ago )
Associated Press (AP)
Tokyo Olympics postponed, U.S. closes in on relief package
The International Olympic Committee has postponed this summer's Tokyo Games for a year as coronavirus deaths mount around the world and U.S. lawmakers close in on a nearly $2 trillion deal to help cushion the economic damage from the crisis
11:16AM ( 50 minutes ago )
The Latest: Britain considers help for self-employed
Britain's Treasury chief says a financial support package is being considered to help the 5 million self-employed people during the coronavirus pandemic
11:14AM ( 52 minutes ago )
Stocks surge 7% on building hopes for US virus stimulus
Stocks are jumping in morning trading on Wall Street Tuesday amid expectations that Congress is nearing a deal on a big coronavirus relief bill
11:02AM ( 1 hour ago )
AP Online Headlines - Washington
What you need to know today about the virus outbreak
A desperate race to find medical equipment continues as the World Health Organization warns that the outbreak is accelerating and calls on countries to take strong, coordinated action
8:32AM ( 3 hours ago )
The Latest: Japan PM to propose postponement of Olympics
Japan’s NHK public television says Prime Minister Shinzo Abe will propose a one-year postponement for the Tokyo Olympics during talks with IOC President Thomas Bach
8:08AM ( 3 hours ago )
Global stocks rebound on hopes for US stimulus package
Global stocks are surging while U.S. futures have raced ahead so much that trading had to be halted
7:34AM ( 4 hours ago )
AP Online Congress News
Vatican employees balk at lack of full shutdown amid virus
The Vatican is under pressure to let more of its employees work from home after several offices remained open even after Italy shut down all non-essential industry in a bid to contain the coronavirus
10:35AM ( 1 hour ago )
Egypt announces 2-week nightly curfew to slow virus
Egypt has announced a two-week, 7 p.m. to 6 a.m. curfew for its over 100 million people to slow the spread of the new coronavirus
10:34AM ( 1 hour ago )
New home sales drop 4.4% in February
New home sales drop 4.4% in February with bigger virus-related declines expected
10:29AM ( 1 hour ago )
AP Business
Trump says he intends to reopen country in weeks, not months
President Donald Trump says that he wants to reopen the country for business in weeks, not months, and claims without evidence that continued closures could result in more deaths than the coronavirus pandemic
7:24AM ( 4 hours ago )
10 Things to Know for Today
Get ready for Tuesday, March 24, with a few things to know about the day’s news from The Associated Press
7:23AM ( 4 hours ago )
Virus deaths mount in US, Europe; Americans hope for relief
As virus deaths mounted and Americans hoped for some economic relief from their divided government, heath officials and leaders warned that the world was entering a critical period that would determine just how deeply the pandemic slices through their nations
6:37AM ( 5 hours ago )
AP Business - Economy
Fed makes strongest bid yet to protect firms and governments
The Federal Reserve is unleashing its boldest effort yet to protect the U.S. economy from the coronavirus by helping companies and governments large and small pay their bills and survive a devastating crisis
9:09PM ( 14 hours ago )
Stocks slump, despite Fed aid, as virus bill stalls again
Stocks fell about 3% on Wall Street after Congress hit another roadblock in talks to inject nearly $2 trillion into the economy
5:10PM ( 18 hours ago )
The Latest: Market swings may accelerate rebalancing needs
Investors usually have to rebalance their mix of stocks, bonds and cash periodically to ensure their portfolio remains aligned with their goals
3:48PM ( 20 hours ago )
AP Business - Financial Markets
Volunteers sew masks for health workers facing shortages
People are banding together to sew face masks for hospitals running desperately short of personal protective equipment as the coronavirus pandemic intensifies
7:04AM ( 5 hours ago )
New coronavirus threatens both rich, poor across Mideast
The new coronavirus is continuing its spread across some of the most-vulnerable nations of the Middle East and as the International Monetary Fund warns that a lack of medical supplies in Iraq, Sudan and Yemen could lead to a surge in prices
6:04AM ( 6 hours ago )
In global fight vs. virus, over 1.5 billion told: Stay home
A fifth of the world's population has been asked or ordered to stay home as coronavirus infections soar
11:45PM ( 12 hours ago )
AP Business - Industries
Fallout of '08 bailout looms over Washington negotiations
More than a decade after Washington bailed out big banks, Congress and the White House are engaged in a new debate over emergency spending
9:42AM ( 1 day ago )
Stocks open lower on Wall Street as relief bill stalls
Wall Street is opening lower after a bill to provide emergency help to the economy stalled in Congress
9:39AM ( 1 day ago )
Federal Reserve to lend up to $300B to businesses, cities
In a series of sweeping steps, the Fed will lend to small and large businesses and local governments as well as extend its bond buying programs. It's all part of the Fed's ongoing efforts to support the flow of credit through an economy ravaged by the viral outbreak
8:30AM ( 1 day ago )
AP Business - Financial Services
The Latest: NY Gov. Cuomo: Infection rate accelerating
New York Gov. Andrew Cuomo sounded his most dire warning yet about the coronavirus pandemic, saying the infection rate in New York is accelerating
11:46AM ( 21 minutes ago )
US manufacturing might vs virus; drinking at home
Manufacturers are reconfiguring operations to help produce desperately needed medical gear
11:42AM ( 24 minutes ago )
Valeria Luiselli's 'Lost Children Archive' wins Folio Prize
Mexican writer Valeria Luiselli’s novel “Lost Children Archive” has won the Rathbones Folio Prize for literature
11:39AM ( 27 minutes ago )
On hold: Tokyo Olympics postponed to 2021
The Tokyo Olympics have been postponed until 2021
11:35AM ( 31 minutes ago )
Georgia cities group urges all to impose virus restrictions
The Georgia Municipal Association is urging all 538 cities in the state to impose a nighttime curfew and other restrictions to slow the coronavirus outbreak
11:35AM ( 31 minutes ago )