Markets Stage Comeback……
U.S. equities rebounded from Monday’s tumble to finish higher in a volatile session that saw 1,000+-point swings in both directions for the Dow throughout the day, amid increased expectations that a fiscal policy response to the coronavirus outbreak may be on the horizon. President Donald Trump met with Congressional members today and pitched the possibility of a payroll tax cut to aid in the uncertainty surrounding the extraordinary turmoil as of late, with a press conference set for after today’s close. Crude oil prices also recovered some of yesterday’s plunge after Russia suggested that it may be open to resuming talks with Saudi Arabia, which boosted production in reaction to Russia’s resistance of OPEC’s proposed production cuts last week that ignited an oil price war and tanked crude prices. Treasury yields bounced off a recent tumble to all-time lows and the U.S. dollar pared yesterday’s drop, with a modest increase in small business optimism in February the only item of note on the economic calendar. Meanwhile, gold traded sharply lower. On the equity front, Dick’s Sporting Goods rose on the heels of its earnings report, which included a dividend increase, and Delta Air Lines announced capacity cuts, while Stitch Fix lowered its full-year guidance. Europe turned lower amid the continued coronavirus uneasiness within in the region, but markets in Asia were higher.
The Dow Jones Industrial Average rallied 1,167 points (4.9%) to 25,018, the S&P 500 Index jumped 136 points (4.9%) to 2,882 and the Nasdaq Composite climbed 394 points (5.0%) to 8,344. In heavy volume, 1.8 billion shares were traded on the NYSE and 4.3 billion shares changed hands on the NASDAQ. WTI crude oil gained $3.23 to $34.36 per barrel and wholesale gasoline was up $0.02 to $1.16 per gallon. Elsewhere, the Bloomberg gold spot price fell $34.17 to $1,646.30 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—jumped 1.6% to 96.45.
The stock markets, crude oil prices, Treasury yields and the U.S. dollar all recovered some of yesterday’s decisive tumbles that came as the amplified economic and earnings uncertainty regarding the spreading of the coronavirus was met with a crash in oil prices as a price war erupted after Saudi Arabia pledged to boost production on the heels of Russia’s resistance of OPEC’s proposed production cuts. The rebound was fostered by Russia not ruling out the resumption of talks with Saudi Arabia, and President Donald Trump pitching the possibility of payroll tax cuts and relief for hourly wage earners and travel-related industries affected by the turmoil when he met with Congress late in the day. The President is scheduled to speak at a press conference set for after the market close. Also, expectations are running high that the Fed and other global central banks may deploy further stimulus measures after the Fed’s surprising 50 basis point (bp) rate cut last week and ahead of this week’s monetary policy decision from the European Central Bank (ECB).
Treasuries gave back some of yesterday’s strong rally, as the yield on the 2-year note was up 20 bps at 0.53%, the yield on the 10-year note gained 29 bps to 0.79%, and the 30-year bond rate advanced 39 bps to 1.31%.
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