NEW YORK (AP) — Wall Street roared back from its worst day in 30 years Friday with a broad rally that sent the Dow Jones Industrial Average nearly 2,000 points higher — its biggest point gain ever — after President Donald Trump declared the coronavirus pandemic a national emergency.
The Dow’s gains doubled in the last half-hour of trading as Trump made his remarks, giving the index its biggest percentage gain since 2008 and capping a rally that recouped many of the losses from a day earlier. That’s when the index saw its worst slide since the Black Monday crash of 1987 and European indexes had one of the worst drops on record. The major indexes each closed with gains of more than 9%.
The turnaround wrapped up a week of brutal losses on Wall Street amid heightened fears that the virus outbreak will lead to a global recession. Investors have been clamoring for strong action from the U.S. government to combat the economic impact of the outbreak on businesses and workers. All told, the Dow jumped 1,985 points, or 9.4%.
News that the White House and Congress were close to announcing an agreement on a package to provide sick pay, free testing and other resources helped boost the market.
“We’re finally getting that a little late to the party, but it’s better to be late to the party then not to come to the party,” said Ryan Detrick, senior market strategist at LPL Financial. He said the stimulus plan should help cushion the financial effects on people and businesses.
Treasury Secretary Steven Mnuchin said on CNBC that the two sides were “very close to getting this done.” President Donald Trump discussed the matter at a news conference later Friday.
The market’s rout intensified this week amid a torrent of cancellations and shutdowns worldwide. Business closures have fueled fear that a severe pullback in consumer and business spending will tip the U.S. economy into a recession and wreck corporate profits.
Meanwhile, Warren Buffett said Friday that the annual shareholder meeting for Berkshire Hathaway will be streamed live in early May without any attendees, apart from maybe a select number of journalists. The meeting normally draws a crowd to rival professional sporting events.
Even with Friday’s pickup, the stock market was on track for its worst week since October 2008, during a global financial crisis. In just a few weeks, U.S. stocks have wiped out all the gains made during 2019, one of the best years for the market in decades. All the major indexes are in what traders call a bear market.
The virus has infected over 137,000 people worldwide. More than 5,000 have died, but half of those who had the virus have already recovered. The pandemic’s new epicenter is Europe. In the United States, cases have topped 1,600, while 41 people have died, according to the Centers For Disease Control and Prevention.
Friday’s rally was broad, with technology stocks accounting for a big slice of the gains. Shares in cruise line operators, airlines and hotels — among the hardest-hit stocks as people canceled vacations and companies shut down business trips — headed higher.
Investors’ anticipation of a government stimulus effort and a rate cut by the Fed next week likely put traders in a buying mood, though it’s not unusual for stocks to rebound a day after a big decline, something Wall Street calls a “dead cat bounce.”
“I don’t know if I would call this a dead cat bounce, but I would certainly not call it a trend,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “Maybe it reflects a little more optimism that we’re getting a fiscal impulse that will help support the economy, and by extension, the market while we get through this transitory period of economic weakness.”
On Thursday, the Federal Reserve unveiled a massive short-term lending program to try to help smooth trading in U.S. Treasurys. Many economists expect the Fed will move to cut interest rates by a full percentage point, to nearly zero, at its meeting of policymakers next Wednesday.
This week’s historic sell-off helped to wipe out most of the big gains since President Trump took office in 2017. After hitting an all-time high on Feb. 19, the S&P 500 fell more than 20%, officially ending Wall Street’s unprecedented bull-market run of nearly 11 years. The slide into a bear market has been the fastest since World War II.
