US stocks rallied on Wednesday — notching their first back-to-back gains since last month — as Congress and the White House agreed on a $2 trillion coronavirus stimulus package.
The Dow Jones industrial average rose 495.64 points, or 2.39 percent, to 21,200.55 after lawmakers reached an overnight deal for a giant spending package that will send checks directly to millions of Americans, even as it bails out virus-stricken industries ranging from airlines and insurers to restaurants and hotels.
Earlier in the session, the Dow had climbed as much as 1,315.02 points, or 6.3 percent. The S&P 500, which rose as much as 5 percent after a morning of choppy trading, closed 1.2 higher. The tech-heavy Nasdaq, however, close 0.5 percent lower after rising as much as 3.4 percent earlier in the session.
The Dow’s Wednesday rally came on the heels of the Dow’s best day since 1933, in which stocks on Tuesday jumped 2,112 points, or 11.4 percent, showing signs that markets are beginning to find the bottom of a brutal downturn even as the virus continues to pose a threat, analysts said.
“If we can just close in the green today, it will tell you that there are real buyers coming back into the market,” said Eric Marshall, director of research at Hodges Capital Management. “Now that they’ve addressed their liquidity, they’ve repositioned portfolios, now people are going back in going, ‘OK, what is the reality of the situation?’”
The largest stimulus package in American history answered Wall Street’s call for a fiscal response to the virus crisis complementing the Federal Reserve’s aggressive moves to stanch the economic bleeding. While the markets anticipated the deal Tuesday, analysts said investors were still encouraged by the fact that it actually got done.
They also welcomed Congress’s efforts to help Main Street through cash payments to Americans and support for small businesses, according to Michael Cuggino, president and portfolio manager of the Permanent Portfolio Family of Funds.
“I think this does provide some psychological benefit to the market in terms of seeing leadership from DC,” Cuggino said.
“I think the market was worried that they would fiddle while Rome burned, so to speak, because every day you walk the streets, you get a sense of the real impact of a complete shutdown in our economy and our society,” he added.
The stimulus bill’s measures to shore up pandemic-battered industries such as airlines and hospitals appeared to help the Dow outperform Wall Street’s other benchmarks. The 30-stock index has not posted two straight days of gains since early February.
Beleaguered aerospace giant Boeing led the Dow with its shares surging 24 percent to $158.73, while insurance giant UnitedHealth rose 6.8 percent to $234.49.
Companies that have taken a beating during the virus crisis have “gone up tremendous percentage gains but from very low levels, and that’s because of the effect of the stimulus bill,” said Donald Selkin, chief market strategist at Newbridge Securities.
Wednesday’s stock rally came even as the virus continued to spread in the US, with the number of reported cases in New York — the nation’s epicenter of the crisis — surpassing 30,000. Widespread lockdowns leading to business closures and mass layoffs have sparked fears of a deep economic recession, though many experts expect a quick rebound after the virus subsides.
President Trump indicated Tuesday that he wants to accelerate the comeback, saying he wants the country “opened up and raring to go” by Easter. The comments were likely meant to inspire optimism among investors that the shutdown won’t last forever, observers said, as the scope and path of the outbreak remain uncertain.
“My personal view is that we need to start seeing more tests. The more tests, the more clarity you’re going to get,” said Sahak Manuelian, managing director and head of equity trading at Wedbush Securities. “Once we start getting a handle on how bad this contagion is or is not, then we can start making some decisions.”
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