Dow has biggest rally since 1933, surging 11.4% on stimulus hopes

Daniel Fowler
March 25, 2020

The White House and Senate leaders struck a deal on Wednesday for a massive $2 trillion package to provide aid to industries, businesses and individuals as well as state and local governments struggling to cope with the fallout of coronavirus containment measures.

The Dow Jones Industrial Average was trading more than 400 points of 2 percent higher minutes into the start of trading in NY.

The details of the package are under negotiation, but Republicans who control the Senate have proposed sending out checks of as much as $1,200 per-person and $500 for each child, depending on income.

The severity of the spread of COVID-19 and the expectations of aggressive stimulus measures have whipsawed financial markets with the Dow Jones .DJI gaining nearly 2,000 in one session last week, only to fall almost 3,000 points the next day.

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The latest slide came despite actions announced by the Federal Reserve to help the bond market, companies and consumers - and the central bank's vow to use "its full range of tools".

"You can't take this bounce and say that (the market) will turn around next week or the week after", said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. In the USA, more than 55,000 cases have been confirmed along with over 69,000 in Italy. Spain confirmed a total of over 42,000 cases, while Italy reported a total of at least 69,100 confirmed cases and 6,800 deaths. "In reality, we believe it will be a combination of these, and in some cases there are already signs these are in place". With his re-election chances likely to be defined by a recovery from the crisis, President Donald Trump on Tuesday called for the economy to be restarted by April 12 - but market analysts have their doubts about that timetable. Capital Economics now sees second quarter U.S. economic growth plunging 40 percent from a year earlier and unemployment spiking to 12 percent. This was a machine-driven rally, just like the sell-offs ...

Some investors believed the stock market was overdue for a big bounce, having priced in a worst-case scenario regarding the economic damage being done by coronavirus-related shutdowns.

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