The Dow Jones industrial average surged 2,112 points, its biggest-ever point gain, on Tuesday as Congress moved closer to passing coronavirus aid package.
The 11.4% gain was the Dow’s biggest since 1933.
The huge jump was a sign of investor belief that Congress has no alternative other than to pass a $2 trillion rescue of a U.S. economy that is on life support.
The massive stimulus is designed to be a lifeline to Americans and their employers until the coronavirus is brought under control and the country returns to some semblance of normalcy. The Federal Reserve signaled the gravity of the situation Monday when, in an unprecedented move, said it would spend whatever it takes to preserve the U.S. financial system.
Markets starved for good news shot upward Tuesday on faith that the stimulus would pass.
The Dow rose 2,112.98 points, to 20,704.91. The S&P 500, which is much more important to most 401(k) accounts, rose 209.93, or 9.4%, to 2,447.33 for its third-biggest percentage gain since World War II. The Nasdaq composite jumped 557.18 points, or 8.1%, to 7,417.86.
“It’s too early to be blindly optimistic, but the size and pace of the policy responses to this crisis are very encouraging,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments. “This is not a time to be heroes calling a market bottom, but we are keeping a close eyes on indications of light at the end of the tunnel.”
All 11 S&P sectors were positive, led by a beaten-down energy sector that had lost half of its value this year due to a collapse in oil prices. Energy posted a nearly 10% gain, led by oil giants such as Chevron. Several oil companies, including BP, saw shares spike after companies said they would tighten their belts in the wake of the rock-bottom oil prices.
Boeing, Home Depot, American Express, JP Morgan and Walt Disney – most of whom have been savaged by the coronavirus restrictions – had big days on the Dow as optimism over the stimulus took hold.