Stocks push higher tentatively after worst drop since 1987
U.S. stocks jittered higher at the start of trading Tuesday, a day after plunging to their worst loss in more than three decades, as uncertainty about how badly the coronavirus will hit the economy continues to dominate markets.
The Trump administration is proposing a roughly $850 billion stimulus plan to help the economy, including relief for small businesses and the airline industry, as well as a tax cut for wage-earners, sources told The Associated Press. The travel industry has been among the industries hardest hit by the outbreak, as planes sit grounded and hotels and casinos shut their doors.
Trading is unsettled around the world beyond the S&P 500, where an initial gain of 3.2% trimmed to 1% within 10 minutes. European stocks swung from gains to losses. South Korean stocks fell to their fifth straight loss of 2.5%, but Japanese stocks shook off an early loss to edge higher.
Stocks have had a few rebounds since the market began selling off in mid-February on worries that COVID-19 will slam the economy and corporate profits. But all have ended up short-lived. The S&P 500 has had four days in the last few weeks where it surged more than 4%, a remarkably large amount in normal times, and has slumped more than 2.8% the following day each time.
The S&P 500 is nearly 28% below its record set last month and is back to where it was in late 2018, erasing most of the best year for stocks in decades.
The big question for investors is when the new coronavirus will slow its spread, and when the economy can begin to recover from shutdowns affecting a growing list of industries by the day, from airlines to restaurants.
The virus has spread so quickly that its effects haven’t shown up in much U.S. economic data yet. A report on Monday about manufacturing in New York State was the first piece of evidence that manufacturing is contracting due to the outbreak.
“The global recession is here and now,” S&P Global economists wrote in a report Tuesday.
They say initial data from China suggests its economy was hit harder than expected, though it has begun to stabilize. “Europe and the U.S. are following a similar path,” the economists wrote.
The S&P 500 was up 1%, as of 9:41 a.m. Eastern time. A day earlier, it plunged 12% Monday after President Donald Trump said the economy may be heading for a recession, its worst day since the Black Monday crash of 1987.
The Dow Jones Industrial Average was up 100 points, or 0.5%, at 20,289, and the Nasdaq was up 1.1%.