NEW YORK (AP) — Wall Street roared back from its worst day in 30 years on Friday with a broad rally that sent the Dow Jones Industrial Average nearly 2,000 points higher — its biggest point gain ever — after United States (US) President Donald Trump declared the coronavirus pandemic a national emergency.
Fuelled by a late-day surge while Trump was speaking, the Dow saw its largest percentage gain since 2008. The rally recouped many of the losses from a day earlier, when the index experienced 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 nine per cent.
The session capped a dizzying week on Wall Street, with wild swings driven largely by uncertainty over how much damage the coronavirus would cause to the global economy. By Thursday, the Dow had suffered two drops of more than 2,000 points and the longest-ever bull market had ended.
Then on Friday stocks rallied, shooting sharply upward in the last half-hour of trading as investors appeared to gain confidence that the Trump administration has a plan to combat the outbreak from both a health care and economic perspective.
Despite Friday’s pickup, the market still ended the week with its second-worst weekly loss in the past 10 years. All the major indexes are in what traders call a bear market.
Investors have been clamouring for strong action from the US government to combat the outbreak’s effect on businesses and workers. 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 in the morning.
“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.
Trump spoke to the nation twice this week about the coronavirus, and the stock market had decidedly different reactions each time.
On Wednesday night, Trump announced restrictions on travel from Europe and some seemingly minor economic measures. Global markets sold off, fearful that the US and other countries lacked a strong response to the outbreak. That changed on Friday afternoon, when Trump declared the national emergency, which frees up funds for states and cities to fight the virus. He also announced measures to shore up oil prices, ease the economic burden on students and improve the level of testing in the US for the virus.
Trump’s news conference, which also featured remarks from health experts, helped reassure investors that the administration is now taking aggressive action to limit the spread of the virus, said Quincy Krosby, chief market strategist at Prudential Financial.
“What the market was focussed on today was the containment of the virus. That’s always been the top concern and a concern that the administration was behind the curve on,” Krosby said. She described the steps outlined by the President and experts as “positive and optimistic.”
“And that’s exactly what the market needed and the country needed today,” she said.
Speaker Nancy Pelosi announced a deal on Friday with the Trump administration for an aid package from Congress that would provide free tests, sick pay for workers and bolster food programmes.
The market’s rout intensified this week amid a torrent of cancellations and shutdowns worldwide. Business closures have fuelled fear that a severe pullback in consumer and business spending will tip the US economy into a recession and wreck corporate profits.