The Dow Jones Industrial Average surged over 5 per cent on Monday while the S&P 500 and Nasdaq each jumped more than 4 per cent in a major rebound following last week’s steep sell-off sparked by fears about the coronavirus.
After the stock market extended gains in the session’s final minutes, the Dow wrapped up its strongest one-day gain since 2009, while the S&P 500 and Nasdaq each had their strongest one-day rise since December 2018.
That rally followed the U.S. stock market’s worst week since the 2008 financial crisis, sinking into correction territory on Thursday due to fears of a recession resulting from the epidemic.
The S&P 500 remains down 8.7 per cent from its Feb. 19 record high close. Many investors will consider the index to remain in a correction until it reclaims its high.
Apple jumped 9.3 per cent in its largest one-session leap since 2008. The iPhone maker is still down nearly 9 per cent from its record high close on Feb. 12.
Bank of Japan Governor Haruhiko Kuroda said on Monday that Japan’s central bank would take necessary steps to stabilize financial markets. That followed a similar move by Fed Chair Jerome Powell last Friday.
“We can shrug off an economic downturn, but if it starts to spill into companies’ capacity to pay their debts, then that creates deeper problems. But it seems to me like the central banks are linking arms to find a way to insulate the credit markets from economic uncertainty,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.
Traders see a 100 per cent chance of a 50 basis point rate cut at the Fed’s March meeting, according to CME Group’s FedWatch tool.
The Dow Jones Industrial Average jumped 5.09 per cent to end at 26,703.32 points, while the S&P 500 surged 4.60 per cent to 3,090.23.
The Nasdaq Composite added 4.49 per cent to 8,952.17.
Trading was very busy on U.S. exchanges, with 14 billion shares changing hands compared with a 9.5 billion-share average for the last 20 days.
The S&P 500 information technology index jumped 5.7 per cent in its strongest session since December 2018.