Dow soars almost 2000 points in rebound from biggest drop since 1987

Andrew Cummings
March 28, 2020

Overnight, the sell-off on Wall Street helped to wipe out most of Wall Street's big gains since President Donald Trump took office in 2017.

Could this be a happy Friday the 13th on Wall Street?

Given the steep declines on Thursday - the biggest one-day percentage drop since "Black Monday" in October 1987 - investors were hoping for a stronger bounce-back in today's session.

The Dow Jones Industrial Average surged late in the day, finishing with a gain almost 2,000 points or 9.4 per cent to end the week at 23,185.62, recovering most of Thursday's losses. Based on when it last hit a record, the Dow plunged 20 per cent from February 12, and investors who had only just begun to wade back in are getting crushed by a global health scare that has, thus far, resisted every effort to halt. Four tech megacaps have seen their value jump over US$1 trillion. The S&P 500 gained 2% while the Nasdaq Composite advanced 2.1%. Hong Kong's Hang Seng Index fell 6.7%, while China's Shanghai Composite slid 4%.

In remarks to reporters, Trump tried to calm markets, predicting stocks would eventually bounce back.

Watch all major indices update here.

The market's rout intensified this week amid a torrent of cancellations and shutdowns worldwide.

"Firstly, the details of the fiscal support off the U.S. remains uncertain at this point", she said in a commentary.

The coronavirus outbreak has moved so fast that its impact has not yet shown up in any nationwide economic data.

Treasury Secretary Steven Mnuchin said this morning that negotiations were going very well.

Friday's rally was broad, with technology stocks accounting for a big slice of the gains.

Oil continued its brutal week, with benchmark U.S. crude at $31.50 per barrel. The price of US crude has fallen sharply in anticipation of less demand as businesses reacted to the coronavirus.

Oil prices, which plunged 25% on Monday amid a price war between producers, have steadied in the past two days. European markets fell 12 percent in one of their worst days ever, even after the European Central Bank pledged to buy more bonds and offer more help for the economy. Many economists expect the Fed will move to cut interest rates by a full percentage point, to almost zero, at its meeting of policymakers next Wednesday.

The ECB unveiled fresh stimulus measures but kept interest rates steady on Thursday while its chief Christine Lagarde seemed to put the onus firmly on governments to tackle the coronavirus crisis, sending markets into a tailspin.

The S&P 500's drop put it way over the 20 percent threshold for a bear market, officially ending Wall Street's unprecedented bull-market run of almost 11 years.

Many analysts say financial markets will continue to swing sharply until the number of new infections stops accelerating. That signaled a stunning end to the 11-year bull market. The economy was already on solid footing and well-known companies like Disney and Apple were could help lead a recovery. India's Sensex index rose 4% after the Reserve Bank of India also said that it would inject cash into markets.

The rout came after US President Trump imposed a travel ban on most of Europe and offered few new measures to contain the economic impact of the coronavirus outbreak.

In New York, Broadway theaters were shut down after Gov. Andrew Cuomo announced restrictions on gatherings of more than 500 people. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia. Their plan includes expanded unemployment reimbursement for states, extra money for food security for low-income children and federally funded family and sick leave for people affected by the virus.

After earlier thinking that the virus could remain mostly in China and that any dip in the economy would be followed by a quick rebound, investors are seeing the damage and disruptions mount.

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