Stocks wobbled in tentative trading on Wall Street on Wednesday morning before rising in the early afternoon, one day after a historic, worldwide rally.
The S&P 500 drifted up and down in a relatively tight band, but was up 2.6% around 12:30 p.m., a day after packing a year’s worth of gains into Tuesday as Washington, D.C., neared a $2 trillion deal to aid the economy. Tuesday’s 11.4% gain for the Dow Jones industrial average was its biggest since 1933.
The Dow was up more than 4% and the Nasdaq by about 1%.
The White House and Senate leaders did announce an agreement early Wednesday, with the Senate possibly voting on it in the afternoon. Investors were anxiously waiting for this kind of aid, which will help blunt the blow to the economy as businesses shut down to slow the spread of the coronavirus.
But even optimists say the package provides just the second leg of three that markets need to regain lasting confidence. The Federal Reserve and central banks are also offering tremendous aid by cutting interest rates and supporting lending markets, but investors say they need to see the number of new infections peak before they can feel comfortable knowing how deep the looming economic downturn will be.
“There’s a lot of bad news, there’s very little tangible good news and there’s a lot of uncertainty in between,” said Jack Ablin, chief investment officer at Cresset.
Investors are also still waiting to see the details of Washington’s plan, which will include direct payments to most Americans and aid for hard-hit industries. It’s unclear when the House of Representatives could vote on the plan.
“The markets are taking it in stride today” after leaping so much the prior day on expectations for an imminent deal on the plan, said Darrell Cronk, chief investment officer of Wells Fargo Wealth and Investment Management.
The number of known infections has leaped past 435,000 people worldwide, and more than 19,000 have died, according to Johns Hopkins University. Overall, more than 111,000 have recovered.
For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia and death.
With widening swaths of the economy shutting down and layoffs mounting, economists are sure a steep drop-off is coming. They’re forecasting a report on Thursday will show a record number of Americans filed for unemployment benefits as layoffs sweep the country. What’s unsure is how long it will last.
That uncertainty has led to wild swings in the stock market over the last month. The S&P 500’s 9.4% surge Tuesday was a better performance than the index has turned in for 10 of the last 20 full years.
But the market has also had a couple days within the last few weeks that packed entire years’ worth of losses, including two days down 10.4%. The S&P 500 has not had a back-to-back gain since the sell-off began on Feb. 20, a day after the index set its record. Stocks are down about 27% since then.
The uncertainty has carried over even to trading within a certain day or a certain hour.
The S&P 500 was up 0.9%, as of 11:50 a.m. Eastern time. Earlier in the morning, it was up as much as 2.2% and down as much as 1.6%. The Dow was up 576 points, or 2.8% boosted in large part by a surge for Boeing.
The aerospace giant rose 31% in part on expectations that it stands to gain from the aid package brokered on Capitol Hill. Other travel-related stocks also stormed higher to recoup a fraction of their huge losses over the last month. Royal Caribbean Cruises jumped nearly 17% Wednesday, but it’s still down by nearly 20% for the year.
Nike climbed nearly 11% after it said stronger online sales in China during the coronavirus outbreak helped it offset plunges in revenue caused by the shutdown of stores across the country. The company said it will follow a similar playbook in other countries as the outbreak has spread around the world. It also said sales are bouncing back in China, where the outbreak has eased and most Nike stores have reopened.
European markets initially jumped to strong gains, but they faded as the day progressed. Germany’s DAX was down 0.4%, and the French CAC 40 was up 2.3%.
Earlier on Wednesday, Asian markets surged to big gains following the big U.S. day. Asia, Japan’s Nikkei 225 jumped 8%, South Korea’s Kospi rose 5.9% and the Hang Seng in Hong Kong gained 3.8%.
Echoing the subdued trading in the stock market, Treasury yields were holding relatively steady. The yield on the 10-year Treasury dipped to 0.80% from 0.81% late Tuesday.