Wall Street continues to see wild swings as stocks rise buoyed by Joe Biden’s Super Tuesday win

Wall Street looked to recover Wednesday following an emergency interest rate cut aimed at defusing coronavirus fears and Joe Biden’s Super Tuesday wins. 

Just a day after the U.S. Federal Reserve’s surprise 50 basis point interest rate cut, stocks were on the up at opening bell. 

The Dow Jones Industrial Average rose 466.27 points, or 1.80 per cent, at the open to 26,383.68. The S&P 500 opened higher by 42.38 points, or 1.41 per cent, at 3,045.75. The Nasdaq Composite gained 150.01 points, or 1.73 per cent, to 8,834.10.

The announcement Tuesday from chairman Jerome Powell had marked the Fed’s first off-schedule move since the 2008 financial crisis. Joe Biden’s wins in the Democratic Party primaries also emboldened bets.

In another sign of U.S. investor caution, the yield on the 10-year Treasury sank below 1 per cent for the first time in history. It was at 0.95 per cent early Wednesday. 

U.S. markets had fallen 11 per cent since setting a record two weeks ago as of Tuesday evening. It comes as more than 130 people were confirmed to have coronavirus nationwide, with nine deaths and six cases in New York alone.

A strong performance by Joe Biden, pictured, in the Democratic Party primaries in the United States also emboldened bets as Wall Street looked to recover Wednesday 

Stocks are surging in early trading on Wall Street, led by health care stocks after Joe Biden scored a number of Super Tuesday wins

The Dow Jones Industrial Average jumped 506 points, or 2%, clawing back much of its 2.9% slide a day earlier

WHAT DID THE FEDERAL BANK PLEDGE AND WHY?

On Tuesday, Fed chairman Jerome Powell announced a surprise half-point interest rate cut that shrank the Fed’s key rate to a range of just 1 per cent to 1.25 per cent.  

It marked the first time the central bank has cut rates between scheduled policy meetings since the 2008 financial crisis. And it’s the steepest rate cut the Fed has made since then.

The Fed’s unusual move was a response to economic fears and dizzying stock market plunges that are unnervingly reminiscent of the crisis that nearly toppled the financial system in 2008. 

One problem for the Fed and other central banks is that there are limits to their ability to deal with the economic repercussions of the virus — from closed factories to canceled business travel to disrupted company supply chains. Lower borrowing rates don’t directly address those problems.

Such uncertainties contributed to another sharp fall in stock markets Tuesday. The Dow Jones industrial average sank 786 points, or 2.9 per cent, after a brief surge immediately after the Fed announced its sharp rate cut Tuesday morning.

Powell tried to strike a balanced tone at his news conference, by making it clear that the Fed was aware of the threat and stood ready to bolster the economy, while also emphasizing that U.S. economic fundamentals are sound.

On Wall Street, S&P 500 futures ESc1 climbed 1.8 per cent on Biden’s showing, after falling overnight despite the Fed’s rate cut.

Biden, a moderate seen as less likely to raise taxes and impose new financial regulations, won primaries in nine states. 

That set up a one-on-one battle for the Democratic presidential nomination with democratic socialist Bernie Sanders.  

Shares of health insurers UnitedHealth Group Inc, Centene Corp, Humana Inc and Cigna Corp surged between 9.8 per cent and 13.4 per cent. The broader healthcare .SPXHC index jumped 3.2 per cent, the most among all the major S&P sectors trading higher.

The healthcare sector had suffered in recent months as Sanders and his ‘Medicare for All’ proposal, which would eliminate private health insurance altogether, gained prominence. 

Biden’s Super Tuesday wins came hours after Federal Reserve chairman Jerome Powell acknowledged the ultimate solution to the virus challenge will have to come from health experts and others, not central banks.

The Fed has a long history of coming to the market’s rescue with lower rates and other stimulus, which has helped this bull market in U.S. stocks become the longest on record.

On Monday, the Dow recorded its biggest daily gain in more than a decade on rising anticipation for coordinated support from the Fed and other central banks. Even before Tuesday’s announcement, traders were convinced the Fed would cut rates by half a percentage point on March 18 at its next meeting.

The US rate cut was the Fed’s first outside a regularly scheduled meeting since the 2008 global crisis. That prompted some traders to think the Fed might foresee an even bigger economic impact than markets fear. 

And big US banks have already been rolling out contingency plans to respond to the global virus outbreak — requiring some staff to work from home, implementing travel restrictions and talking to regulators about potential stresses.

JPMorgan Chase & Co is asking thousands of U.S. employees to spend a day working from home in the coming weeks to test its contingency plans should the coronavirus spread, sources said

Traders work on the floor of the New York Stock Exchange in New York on Wednesday 

The Dow Jones Industrial Average dropped 785 points Tuesday, pictured, and bond prices surged after an emergency interest-rate cut by the Federal Reserve failed to reassure markets racked by worries that a fast-spreading virus outbreak could lead to a recession

On Monday Wall Street clawed back some of the ground lost in a massive sell-off last week; the last five days of trading is pictured 

This week the bank may also begin sending teams of traders to work from secondary office locations in Brooklyn, New York, and nearby in New Jersey, to test its systems and ensure that any kinks are worked out should the bank need to roll out emergency plans more broadly, one of the sources said.

The largest US bank by assets is testing these contingency plans now because, if the coronavirus spreads further in the United States, it would need to separate employees of the bank’s many business lines to ensure that most business could continue as usual, one source said.

The coronavirus has killed more than 3,000 people, about 3.4 per cent of those infected – far above seasonal flu’s fatality rate of under 1 per cent. 

It continues to spread beyond China, with Italy reporting a jump in deaths to 79 and South Korea reporting more than 500 new cases on Wednesday. 

The death toll in the US climbed to nine on Tuesday, all in Washington state. There are more than 130 confirmed cases nationwide. 

WHAT YOU NEED TO KNOW ABOUT BEING TESTED FOR CORONAVIRUS

On Tuesday, Vice President Mike Pence announced that any American can be tested for coronavirus as long as a doctor approves it.

The move appears to expand upon previous criteria needed for testing by the Centers for Disease Control and Prevention (CDC).

But how do you determine if you have symptoms of COVID-19 and when you should see a doctor?

We break down everything you need to know about being tested for the virus that has infected more than 120 Americans and killed at least nine. 

WHAT ARE THE LATEST GUIDELINES FOR BEING TESTED? 

There are three groups of people that the CDC recommends get tested.

1. People with symptoms such as fever, cough or shortness of breath who have been in ‘close contact’ with someone confirmed to have coronavirus

2. Patients with symptoms who have traveled to areas affected by the virus within the last 14 days

3. Those with symptoms who need to be hospitalized and no other cause for their illness is found. They don’t need to have a travel history or exposure to another patient   

HOW DOES THIS DIFFER FROM THE PREVIOUS CRITERIA?

When the CDC first began testing, only those with a travel history to China – where the outbreak emerged – or those who had been exposed to a confirmed coronavirus patient were tested.

However, the agency says its criteria for testing is always ‘subject to change as additional information becomes available.’  

WHAT TO DO IF YOU NEED A TEST?

Health officials strongly advise that anyone who believes they may be infected not show up unannounced at their doctor’s office in case they expose others to the highly-contagious disease.

Instead, the CDC suggests immediately calling your physician or healthcare provider.  

‘Your healthcare professional will work with your state’s public health department and CDC to determine if you need to be tested for COVID-19,’ the CDC’s website states.

If you are suspected of having the virus, you will most likely get tested at a hospital.

The test involves getting a swab of the patient’s nostril and throat. If the patient has a wet cough, a sample of sputum (a mixture of saliva and mucus) will also be collected.

WHY HAS IT BEEN DIFFICULT FOR PEOPLE TO GET TESTED?

There have been multiple reports of people not having accessing to get tested.

The first batch of test kits that the CDC sent to state and local health departments were faulty, which led to a delay.

Secondly, the CDC had strict criteria for testing, which led to missed diagnoses of people who caught the virus from so-called ‘community spread,’ meaning it’s unknown how they were infected.

A third reason is that some health departments did not leave the decision to test up to doctors as the CDC suggested.

For instance, the Massachusetts Department of Public Health initially required doctors to call a hotline to determine if their patients met CDC criteria for testing.

Then, before the test could be administered, it had to be authorized at the State Public Health Lab.

WILL IT BE EASIER TO GET TESTED NOW?

Since the CDC’s testing fiasco, several health departments have either received new kits from the federal agency or made their own.  

Additionally, the US Food and Drug Administration expanded its Emergency Use Authorization (EUA) policy so allow more labs can apply for approval to test for the virus. 

The CDC that 75,000 test kits are currently available and more are being manufactured.

FDA Commissioner Dr Stephen Han told reporters on Monday that close to one million people would be tested by the end of the week.

But figures from the Association of Public Health Laboratories show that likely no more than 100,000 people would be tested by week’s end. 

 

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