Reuters / Brendan McDermid
- US stocks surged on Tuesday, a day after suffering their worst decline since the depths of the financial crisis.
- Trading was choppy as investors weighed the timing of a government stimulus package designed to boost US economic activity.
- At one point, major indexes erased all gains and turned lower. They then recovered and roared into the close, posting intraday highs in the final hour of trading.
- Investor sentiment also got a boost from a deescalation of the mounting oil-price war between Saudi Arabia and Russia.
- Watch major indexes trade live here.
US stocks surged into the close to end a volatile session on Tuesday.
Sharp midday fluctuations came as investors weighed the timing of a government stimulus package designed to boost US economic activity amid the coronavirus outbreak. A rally in the final hour came after a rough period that saw all major indexes erase gains and turn negative.
The Dow Jones industrial average closed up 1,167 points, or 4.9%, near intraday highs. The S&P 500 also climbed 4.9% on the day.
Investor sentiment was buoyed by reports that President Donald Trump was discussing stimulus measures, including a payroll-tax cut, to help the US economy. Afternoon gains were stoked by reports that Trump told Republican senators that he wanted to cut payroll taxes through the election in November.
The president said on Monday that the White House would unveil a major plan to combat the blow of the coronavirus outbreak but that specifics were still being worked out.
Here’s where major US indexes stood as of the market close on Tuesday:
- S&P 500: 2,882.23, up 4.9%
- Dow Jones industrial average: 25,018.16, up 4.9% (1,167 points)
- Nasdaq composite: 8,344.25, up 5%
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“It’s March madness at the moment, complete with surprising losses, upsets, and comebacks,” Mike Loewengart, managing director of investment strategy at E-Trade Financial, said in an email Tuesday. “It’s impossible to know when the markets will hit bottom, and any bad or uncertain news could send us back into a tailspin.”
Global markets also got a reprieve from the oil-price war between Russia and Saudi Arabia. While both former allies have pledged to boost output, Russia said on Tuesday that it was open to rekindling cooperative efforts with OPEC+.
Crude oil, fresh off its biggest single-day plunge since the Gulf War in 1991 — 31% at its intraday low — rebounded as much as 11% on Tuesday and ended the day roughly 10% higher.
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The jump in oil prices is “not a clear signal just yet,” Collin Martin, a fixed-income strategist with the Schwab Center for Financial Research, told Markets Insider in an interview. Low oil prices for an extended period will be “very challenging for energy companies, especially the highly leveraged ones,” he said.
Investors should remain “rational, disciplined, and unemotional” while navigating the market swings, Dev Kantesaria, a managing partner at Valley Forge Capital Management, told Markets Insider in a note.
“We are fortunate to have a recent example — the 2008-2009 financial crisis,” he said. “The impressive rebound in public equities over the last decade should be a lesson to those worried about where share prices will be next month or next quarter.”