Following the worst day on Wall Street since the 2008 financial crisis, stocks showed wild swings over the course of the trading session on Tuesday before eventually finishing the day sharply higher.
The major averages failed to sustain a substantial move to the upside early in the session and pulled back all the way into negative territory before staging another rally over the course of the afternoon.
Going into the close, the major averages saw further upside, ending the session at their best levels of the day. The Dow soared 1,167.14 points or 4.9 percent to 25,018.16, the Nasdaq spiked 393.58 points or 5 percent to 8,344.25 and the S&P 500 surged up 135.67 points or 4.9 percent to 2,882.23.
The initial strength on Wall Street was partly due to bargain hunting after the Dow plummeted by more than 2,000 points on Monday to its lowest closing level in over a year.
Positive sentiment was also generated in reaction to President Donald Trump’s pledge to provide “very substantial relief” amid the economic fallout from the coronavirus outbreak.
Trump told reporters Monday evening that he would be meeting with House and Senate Republicans today to discuss a possible payroll tax cut or other stimulus measures.
The president said he would also talk with GOP lawmakers about getting help for hourly wage earners, hinting at providing paid leave to those affected by the coronavirus.
Buying interest waned shortly after the start of trading, however, as traders expressed uncertainty about the timing and efficacy of Trump’s proposed measures
Trump indicated he plans to hold another press conference later today to discuss the economic steps being taken, although administration officials told CNBC the White House is not ready to roll out specific economic proposals.
However, stocks showed a strong move back to the upside in afternoon trading as traders expressed confidence that the government will eventually provide additional stimulus.
A report from CNBC indicating Trump proposed cutting the payroll tax rate to zero for the rest of 2020 may have contributed to the renewed buying interest.
Oil service stocks showed a substantial move back to the upside after turning in some of the market’s worst performances in the previous session.
Reflecting the strength in the sector, the Philadelphia Oil Service Index soared by 8.7 percent after plummeting by 31.7 percent to a record closing low on Monday.
The rebound by oil service stocks came as the price of crude oil for April delivery jumped $3.23 to $34.36 a barrel following yesterday’s nosedive.
Considerable strength was also visible among banking stocks, as reflected by the 7.3 percent spike by the KBW Bank Index. The index bounced off its lowest closing level in over three years amid a rebound in treasury yields.
Steel stocks also saw significant strength on the day, with the NYSE Arca Steel Index surging up by 6.8 percent after ending the previous session at a three-year closing low.
Software, computer hardware, semiconductor, and brokerage stocks also saw notable strength, moving sharply higher along with most of the other major sectors.
In overseas trading, most stock markets across the Asia-Pacific region showed a notable turnaround over the course of the trading session on Tuesday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while China’s Shanghai Composite Index surged up by 1.8 percent.
Meanwhile, the major European markets moved to the downside after seeing initial strength. While the U.K.’s FTSE 100 Index edged down by 0.1 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.4 percent and 1.5 percent, respectively.
In the bond, treasuries gave back ground after moving sharply higher in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, spiked by 24.9 basis points to 0.748 percent.
A report on consumer price inflation is due to be released on Wednesday but is likely to be overshadowed by the latest news on the coronavirus and efforts to address the economic impact of the outbreak.
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