NEW YORK – The Dow Jones Industrial Average surged to its best day since 1933 as Congress and the White House neared a deal on Tuesday to inject nearly $2 trillion of aid into an economy ravaged by the coronavirus.
The Dow burst 11.4% higher, while the more closely followed S&P 500 index leapt 9.4% as a wave of buying around the world interrupted what has been a brutal month of nearly nonstop selling. Investors released some frustration that had pent up over days of watching the Senate stalemate over the crucial rescue package.
Despite the gains, investors were far from saying markets have hit bottom. Rallies nearly as big as this have punctuated the last few weeks, and none lasted more than a day. Economists and investors alike are still expecting to see some dire economic numbers in the days and weeks ahead.
“Today was a good day, but we would not necessarily see this as turnaround time,” said Adam Taback, chief investment officer for Wells Fargo Private Bank.
Democrats and Republicans said Tuesday they're close to agreeing on a massive economic rescue package, which will include payments to U.S. households and aid for small businesses and the travel industry, among other things. A vote in the Senate could come today.
Investors were imploring Congress to act, particularly as the Federal Reserve has done nearly all it can to sustain markets, including its latest round of extraordinary aid launched Monday.
“It's sort of like, keep the patient alive in the emergency room so you can provide some treatment options,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
The buying circled the world. South Korean stocks surged 8.6%, Germany's market jumped 11% and Treasury yields rose in a sign that investors are feeling less fearful.
The market has seen rebounds like this before, only for them to wash out immediately. Since stocks began selling off on Feb. 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 them, stocks fell an average of 5% the next day.
At a glance
Dow Jones: Rose 2,112.98 points, its biggest point gain in history, to 20,704.91.
S&P 500: Rose 209.93, or 9.4%, to 2,447.33 for its third-biggest percentage gain since World War II.
Nasdaq: Jumped 557.18 points, or 8.1%, to 7,417.86.