NEW YORK (AP) — Stocks were pushing higher on Wall Street Tuesday, a day after their worst plunge in more than three decades, as more aid appears on the way from Washington for an economy struggling under the coronavirus outbreak.
Markets around the world remain highly volatile as traders see a recession growing more likely and large sections of the economy come closer to shutting down. The 4.5% rise for the S&P 500 follows Monday’s 12% plummet.
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 Associated Press. The travel industry has been among the industries hardest hit by the outbreak, as planes sit grounded and hotels and casinos shut their doors.
Investors have been waiting for Washington to offer more aid for the economy. Markets turned decisively higher Tuesday after the Federal Reserve revived a program first used in the 2008 financial crisis to help companies get access to cash for very short-term needs. It’s the latest in a string of big, emergency moves by the Fed and other central banks around the world to support the economy and smooth operations in markets.
No one expects such moves to fix the health crisis, but investors hope they can help blunt the economic blow.
“There are still a lot of questions in the mind of the market as to what will be enough,” said Robert Haworth, senior investment strategist at U.S. Bank Wealth Management. “It’s a start, but there’s still a lot to be determined.”
Ultimately, investors say they need to see the number of infections slow before markets can find a bottom. Worldwide cases now exceed 185,000. In the San Francisco area, nearly 7 million people were all but confined to their homes in the nation’s most sweeping lockdown.
“Volatility is just a way of life pretty much in every market at his point,” Haworth said.
The Dow Jones Industrial Average jumped more than 600 points in early trading, fell 300 then pulled higher again. It was up about 600 points, or 3%, in midday trading A day earlier, it lost nearly 3,000 after President Donald Trump said a recession may be on the way.
Treasury Secretary Steven Mnuchin planned to outline the White House’s package to Senate Republicans at a private lunch, with officials aiming to have Congress approve it this week.
In the meantime, trading is unsettled around the world. European stocks swung from gains to losses. South Korean stocks fell to their fifth straight loss of 2.5%, but Japanese stocks shook off an early loss to edge higher.
The S&P 500, which dictates the movements of workers’ 401(k) accounts much more than the Dow, is still roughly 25% below its record set last month and is back to where it was in late 2018, erasing most of the best year for stocks in decades.
Stocks have had a few rebounds since the market began selling off in mid-February on worries that COVID-19 will slam the economy and corporate profits. But all have ended up short-lived. The S&P 500 has had four days in the last few weeks where it surged more than 4%, a remarkably large amount in normal times, and has slumped more than 2.8% the following day each time.
The virus has spread so quickly that its effects haven’t shown up in much U.S. economic data yet. A report on Monday about manufacturing in New York State was the first piece of evidence that manufacturing is contracting due to the outbreak. On Tuesday, a report showed that retail sales weakened in February, when economists had been expecting a gain.
“The global recession is here and now,” S&P Global economists wrote in a report Tuesday.
They say initial data from China suggests its economy was hit harder than expected, though it has begun to stabilize. “Europe and the U.S. are following a similar path,” the economists wrote.
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AP Business Writer Damian J. Troise contributed.