US stocks rally again on stimulus hopes

Daniel Fowler
March 26, 2020

The S&P 500's 9.8% surge Tuesday was bigger than the index's gains in nine of the last 20 years.

The White House and Senate early in the day announced an agreement on a US$2 trillion economic rescue package to bolster the United States economy and help millions of Americans put out of work with businesses shuttered due to the coronavirus outbreak.

A day after its single biggest point gain in history, the Dow Jones Industrial Average rose more than 1,100 points, or 5.3%, by midday.

"Until we know we can go back to work safely, that we can go to restaurants and go to stores and engage with other humans in close proximity, I don't think you can make an economic or a market call".

The stimulus includes a US$500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to US$3,000 apiece to millions of USA families. How soon can small and mid-sized businesses who are forced to layoff workers access the $350 billion set aside in the Senate version?

Countries that have locked down their populations to prevent the spread of the coronavirus need to use the time to find and attack the virus, the World Health Organization said. Globally, more than 400,000 cases have been confirmed, according to data from Johns Hopkins University. The S&P 500 and the Nasdaq Composite were up around six percent.

The S&P 500 was down 1.4%, as of 10 a.m.

The pan-European STOXX 600 index rose 3.09 per cent.

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The 30-stock average climbed more than 2%, or 495 points.

The coronavirus continues to spread throughout the USA, forcing state governments to order almost a third of the population to stay at home, resulting in thousands of businesses being closed, and throwing millions of Americans out of work. The dollar slipped for a third straight session as the scramble for liquidity was soothed, though it was starting to look a little stronger again.

The dollar index fell 0.216%, with the euro up 0.44% to $1.0834. The Japanese yen weakened 0.24% versus the greenback at 111.51 per dollar.

European Central Bank chief Christine Lagarde asked euro zone finance ministers during a videoconference on Tuesday to seriously consider a one-off joint debt issue of "coronabonds", officials told Reuters.

The S&P 500 was drifting between gains and losses in the first few minutes of trading, a day after packing a year's worth of gains into Tuesday on expectations that Washington was close to a $2 trillion deal to aid the economy.

Now that the massive USA stimulus package has been agreed to in the Senate, the question on Wall Street is on timing: how long will it take to reconcile the House and Senate versions and get it on the desk of the president to sign?

Brent crude was down 17 cents, or 0.6%, to $26.98 a barrel.

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