U.S. stocks surged Tuesday as investors began to see gradual signs of the coronavirus leveling off and states beginning to devise plans to lift shutdowns and reopen parts of the U.S. economy.
The bullish day on Wall Street came despite an earlier report from the International Monetary Fund that said the pandemic is sinking the global economy into the deepest level seen since the Great Depression of the 1930s.
The Dow Jones Industrial Average closed up 558.99 or 2.39% to 23,949.76.
The NASDAQ composite index was up 323.32 or 3.95% to 8,515.74.
The S&P 500 was up 84.43 or 3.06% to 2,846.06.
Some big companies also reported first-quarter earnings, giving investors an early peek into the impact of the virus on U.S. business during the first three months of the year.
Johnson & Johnson rose after beating earnings estimates and raising its dividend, even though the health care giant also had to slash its outlook. Earnings and revenue at JPMorgan Chase and Wells Fargo fell after saying they were bracing for losses on loans as millions of Americans became unemployed.
Many companies have ceased giving earnings estimates due to uncertainty over when officials will determine it’s safe to roll back the social distancing and stay-at-home mandates that have all but ground the economy to a halt.
President Donald Trump has been discussing with senior aides how to roll back federal social distancing recommendations that expire at the end of the month. And governors around the U.S. have begun collaborating on plans to reopen their economies in what is likely to be a drawn-out, step-by-step process to prevent the coronavirus from rebounding with disastrous results.
Health officials on the coronavirus task force have suggested the mandates for people to stay home to combat the virus may need to remain in place longer, raising the possibility that many businesses could end up bankrupt.
In Italy, Spain and other places around Europe where infections and deaths have begun stabilizing, the process of reopening the economy is already underway, with certain businesses and industries allowed to reopen in a calibrated effort aimed at balancing public health against their countries’ economic well-being.
“Wall Street is encouraged simply by the conversation of a reopening of the economy,” said Sam Stovall, chief investment strategist, CFRA.
Stocks will certainly face more volatility in the days and weeks ahead as the IMF’s latest outlook projects global GDP will contract by 3 percent in 2020, which is bigger than the fallout from the financial crisis of 2008.
As most global commerce remains locked down amid the “Great Pause,” there is cautious optimism that the outbreak in the U.S. has begun to plateau in some of the worst-hit areas, like New York.
As uncertainty grips investors, another big infusion of economic support by the Federal Reserve helped spur a big rally last week.
World shares mostly rose on Tuesday as investors braced for news on how the crisis has hurt corporate earnings and the Chinese economy.
Data released Tuesday showed China's exports fell at a slower pace in March than in the previous two months. Forecasters warned of harder times ahead as the coronavirus pandemic depresses global demand and disrupts production, supply chains and finance.
“In our baseline scenario, world trade falls 9% this year, but in a ‘worst case’ scenario, the fall is 34%. Maintaining global value chains is likely to become more challenging and costly as protectionism increases, but is also a way of managing risks," ING said in a commentary.
Beijing is due to announce economic growth for the first quarter on Friday, and a raft of potentially dismal corporate earnings also are in the pipeline.
Still, the mood in Asia was upbeat. Japan's benchmark Nikkei 225 added 3.1% to finish at 19,638.81. Australia's S&P/ASX 200 gained 1.9% to 5,488.10, while South Korea's Kospi jumped 1.7% to 1,857.08. Hong Kong's Hang Seng edged 0.6% higher to 24,435.40, and the Shanghai Composite added 1.6% to 2,827.28.
Asian indexes largely closed higher and Wall Street futures pointed to small gains on the open. European markets, however, turned slightly lower.
France’s CAC 40 edged 0.1% lower to 4,501 and Britain's FTSE 100 lost 0.4% to 5,818. Trading in Germany’s DAX was halted for technical problems and last traded 1.1% higher at 10,675.93 earlier in the day. The futures for the Dow industrials were up 1.3% and the S&P 500 futures gained 1.1% after earnings from Johnson & Johnson beat expectations.
“The long bank holiday weekend produced some encouraging numbers that suggest many countries are now on a more positive trajectory,” Craig Erlam, senior market analyst with Oanda, said of the panedmic and its economic impact.
Benchmark U.S. crude oil fell $2.30, or 10.3%, to settle at $20.11 a barrel Tuesday. Brent crude oil, the international standard, fell $2.14, or 6.7%, to $29.60 a barrel.
Wholesale gasoline rose 2 cents to 72 cents a gallon. Heating oil fell 5 cents to 94 cents a gallon. Natural gas fell 7 cents to $1.65 per 1,000 cubic feet.
Gold rose $7.50 to $1,768.90 an ounce, silver rose 59 cents to $16.13 an ounce and copper rose 3 cents to $2.33 a pound.
The dollar fell to 107.18 Japanese yen from 107.52 yen. The euro rose to $1.0980 from $1.0922.
— Yuri Kageyama, Alex Veiga, Stan Chose, and Damian J. Troise were the principal writers of this report for The Associated Press.
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