Stocks are set for a small rebound after Wall Street’s worst day since Black Monday

U.S. stocks jumped as President Donald Trump promised he would be ‘going big’ with plans to blunt the economic pain caused by the coronavirus pandemic. 

The main indexes rose 6 percent on Tuesday, a day after their steepest declines since the 1987 crash, as the Federal Reserve took further steps to boost liquidity.

At the closing bell, the Dow Jones Industrial Average was up 1,048.49 points, or 5.19 percent, to 21,237.01, the S&P 500 gained 142.83 points, or 5.99 percent, to 2,528.96 and the Nasdaq Composite added 430.19 points, or 6.23 percent, to 7,334.78.

Stocks rallied as Trump and the White House coronavirus team addressed the nation, outlining a stimulus plan that included payments to small businesses, loan guarantees to industries such as airlines and hotels, and assistance for workers.

Earlier in the day, the Dow dipped into negative territory, briefly dropping below 20,000 points for the first time since February 2017.   

Thomas Green, Vice President of trading floor operations, rings the opening bell at the New York Stock Exchange on Tuesday. Visitors have been banned from the floor, and the sight of large groups visiting to ring the opening bell is for now a thing of the past

Stock traders work at the New York Stock Exchange on Tuesday.

Stock traders work at the New York Stock Exchange on Tuesday. 

Monday’s 12 percent drop for the S&P 500, its worst day in more than three decades, came as voices from Wall Street to the White House said the coronavirus may be dragging the economy into a recession.

The S&P 500 has shed nearly 30 percent since setting a record less than a month ago, and its at its lowest point since the end of 2018. 

Monday’s precipitous losses accelerated in the last half hour of trading, after President Donald Trump said the economy could be headed for a recession and asked Americans to avoid gatherings of more than 10 people.

Asked if a recession was on the cards at a press conference on Monday, Trump said: ‘Maybe. We’re not thinking in terms of recession, we’re thinking it terms of the virus.’  

The Trump administration is proposing a roughly $850 billion stimulus plan to help the economy, including relief for small businesses and the airline industry, as well as a tax cut for wage-earners, sources told the AP. 

The travel industry has been among the industries hardest hit by the outbreak, as planes sit grounded and hotels and casinos shut their doors. 

Monday’s plunge came even though the Federal Reserve rushed to announce a new round of emergency actions before markets opened for trading on Monday. 

Trump, at a press conference on Monday afternoon, said the country was 'maybe' heading for a recession

Trump, at a press conference on Monday afternoon, said the country was ‘maybe’ heading for a recession

The moves are aimed at propping up the economy and getting financial markets running smoothly again, but they may have raised fears even further. Investors are also waiting for the White House and Congress to offer more aid to an economy that’s increasingly shutting down by the hour.

The Dow Jones Industrial Average plunged 2,997 points, or 12.9%.

Declines last week ended the longest-ever bull market on Wall Street, nearly 11 years following the financial crisis. There’s seemingly no escape from the uncertainty: From parked airplanes to empty restaurants, nobody knows when economies might revive or even when countries will be able to get the spread of the virus under control.

Closing businesses can help slow the spread of the virus, but it also takes cash out of the pockets of companies and workers.

The best-case scenario for many investors is that the economic shock will be steep but short, with growth recovering later this year after businesses reopen. Pessimists are preparing for a longer haul.

Streets and sidewalks are mostly empty near the New York Stock Exchange, right, on Monday

Streets and sidewalks are mostly empty near the New York Stock Exchange, right, on Monday

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. 

But severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and the virus appears to have a much higher mortality rate than the typical flu in those groups.

The Federal Reserve has been trying to do what it can to help the economy, and over the weekend it slashed short-term interest rates back to their record low of nearly zero.

It also said it also will buy at least $500 billion of Treasury securities and $200 billion of mortgage-backed securities to help calm the Treasury market, which is a bedrock for the world´s financial system and influences stock and bond prices around the world. Trading in the market was starting to snarl last week, with traders spotting disconcertingly large gaps in prices offered by buyers and sellers.

The yield on the 10-year Treasury rose to 0.81% from 0.73% late Monday.

In currency trading, the dollar rose to 107.08 Japanese yen from 105.90 yen. The euro weakened to $1.1011 from $1.1184. 

Regulators prepare to help traders work remotely as trillions in trading shifts from high-tech exchanges to makeshift home offices 

Federal regulator are preparing to make it easier for traders to work from home, as the financial system girds itself for the likelihood that trillions in trading volume will shift from exchanges to home offices.

The U.S. Commodity Futures Trading Commission (CFTC) is planning to allow market participants to skip certain record-keeping requirements if they work from home over coronavirus fears, the Wall Street Journal reported on Tuesday citing officials familiar with the matter.

The relief from the regulator is short-term and will apply to trading venues, banks, brokers and other parties until June 30, according to the report.

Trader Peter Tuchman works at a podium usually reserved for guests at the New York Stock Exchange on Monday, as traders try to practice social distancing and visitors are banned

Trader Peter Tuchman works at a podium usually reserved for guests at the New York Stock Exchange on Monday, as traders try to practice social distancing and visitors are banned

The first set of no-action letters – where regulators inform market participants that they won’t enforce certain rules – is expected to come Tuesday, the report said.

The measures to be announced include extending certain filing deadlines and allowing manual record-keeping as traders will not have access to phone lines that can tape calls, a regulatory requirement under normal circumstances, the report added.

The CFTC did not immediately respond to a request for comment.  

Coronavirus crisis hit retail sales last month, new data shows

The coronavirus took a bite out of US retail sales in February, government data released Tuesday showed, with almost all sectors falling and fuel sales leading the decline.

Retail sales in February declined 0.5 percent to $528.1 billion, seasonally adjusted, a worse-than-expected result and a sharp decline that erased most of the gain seen in January. 

The data are the latest in the growing body of evidence of the virus’ economic toll, but the survey was taken before the outbreak spread across the United States and put entire cities on lockdown, which has led many economists to conclude the US is likely heading into recession.

While sales were still a 4.3 percent above February 2019, Gregory Daco of Oxford Economics said that number was distorted because spending pulled back in early 2019 due to the extended federal government shut down.

‘Disruptions from the coronavirus will bring the economy’s main engine to a halt,’ he wrote in an analysis. ‘As the virus keeps consumers at home and panic spreads, discretionary spending and ‘social consumption’ will take a significant hit.’

Times Square in Manhattan is seen nearly deserted on Monday night, after New York ordered all restaurants and bars to switch to delivery and carry-out only to stop the virus spread

Times Square in Manhattan is seen nearly deserted on Monday night, after New York ordered all restaurants and bars to switch to delivery and carry-out only to stop the virus spread

Gas stations led the fall in sales with a 2.8 percent drop compared to January as oil prices began declining at the end of February, amid reduced global demand due to the coronavirus outbreak in China, which has now spread worldwide.

US sales of building materials and electronics also saw declines of about one-and-a-half percent.

Food and beverage sales were flat, perhaps thanks to stockpiling and panic buying as the virus loomed in the public conscience, while sporting goods, music and book stores registered a slight increase.

Nonstore retailers, such as e-commerce websites, posted a gain of 0.7 percent.

Data will almost certainly get worse before it gets better, Rubeela Farooqi of High Frequency Economics said.

‘The data indicate net slowing in total real spending,’ she wrote in a note, adding she expects total consumer spending to register a decline of 1.5 percent in the second quarter.

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