US stocks surge more than 1,000 points

US stocks have bounced back from three-year lows as they surged more than 1,000 points as hopes build that Congress will agree on a $2trillion coronavirus rescue package. 

The major US indexes jumped more than 5 percent in the first few minutes of trading on Tuesday. 

The Dow Jones Industrial Average rose 1,130.26 points (6.08%), at the open to 19,722.19. 

The S&P 500 opened higher by 107.04 points (4.78%) at 2,344.44. The Nasdaq Composite gained 335.47 points (4.89%) to 7,196.15 at the opening bell. 

Top congressional and White House officials said they expect to reach an agreement Tuesday on the relief package, though some issues remain. Investors have been frustrated waiting for the U.S. government to do what it can to help the economy, which is increasingly shutting down by the day, after the Federal Reserve has done nearly all it can. 

The major US indexes jumped more than 5 percent in the first few minutes of trading on Tuesday

The S&P 500 and Dow Jones indexes had closed about 3 percent lower on Monday as a rise in US infections and lockdown in several states overshadowed historic measures by the Federal Reserve to boost credit in the economy. 

The market has seen rebounds like this before, only for them to wash out immediately. Since the market began selling off on February 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 every one of them, stocks fell again the next day. 

Ultimately, investors say they need to see the number of new infections peak before markets can find a bottom.  

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.  

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. It’s the latest in a string of extraordinary moves by the U.S. central bank.

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.

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.

‘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.’

A further boost to sentiment has come from the news that China 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.’