Stock markets rose sharply on Monday, recovering some of last week’s fear-fueled losses. The Dow Jones Industrial Average traded nearly 1,300 points higher, or roughly 5.1%. On a percentage basis, the move was the Dow’s biggest since March 2009. It was the largest-ever points gain for the 30-stock average. Those gains snapped a seven-day losing streak for the Dow and made up a portion of last week’s 3,500-point rout. Investors had been scrambling for safe assets as coronavirus worries weighed on global economies and supply chains.
· Dow roars back from coronavirus sell-off with biggest gain since 2009, surges 5.1%
Stocks rebounded sharply from their worst week since the financial crisis on Monday, with the Dow Jones Industrial Average posting its best day in more than a decade. Expectations that the Federal Reserve would cut rates drove the gains, which accelerated aggressively into the close.
The Dow closed 1,293.96 points higher, or 5.1%, at 26,703.32. The move on a percentage basis was the Dow’s biggest since March 2009. It was the largest-ever points gain for the 30-stock average.
The S&P 500 climbed 4.6% — its best one-day performance since Dec. 26, 2018 — to close at 3,090.23. The Nasdaq Composite also had its best day since 2018, surging 4.5% to 8,952.16.
Monday’s gains snapped a seven-day losing streak for the Dow.
Apple shares led the Dow higher with a 9.3% jump; Merck and Walmart gained 6.3% and 7.6%, respectively. Utilities, tech, consumer staples and real estate all rose more than 5% to lead the S&P 500 higher.
The major averages were coming off a massive decline from the week before as worries over the coronavirus spreading dented investor sentiment.
- Horrible China economic data
Wall Street got its first look over the weekend at the economic toll the virus has taken on China, the epicenter of the outbreak.
A private survey on Chinese manufacturing activity released during Asian trading hours on Monday came in at its weakest level ever. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) came in at 40.3 for February, far below expectations of a reading of 45.7 by economists in a Reuters poll. PMI readings above 50 indicate expansion, while those below that level signify a contraction.
That came after an official data released Saturday showed China’s official manufacturing PMI plunging to 35.7 in February, a record low, from 50 in January. A reading below 50 indicates contraction in a sector.
The plunge “shows the extent to which an outbreak can hit an economy,” said Ed Hyman, a widely followed economist on Wall Street and Evercore ISI chairman, in a note to clients. “All this is quite uncertain, and we may be overreacting. But we also don’t want to underreact.”
Data out of the U.S. was also lackluster. The ISM manufacturing index fell to 50.1 in February, the lowest level since the end of 2019. It also came below an estimate of 50.8.
Worries over the coronavirus’ impact on corporate profits and the global economy led investors to seek safer alternatives to stocks, pushing U.S. Treasury yields to all-time lows. On Sunday night, the benchmark 10-year rate broke below 1.04% for the first time ever. It was last at 1.14%.
· South Korea stocks lead gains in Asia amid hopes of global central bank action to tackle virus impact
Stocks in Asia rose on Tuesday morning following an overnight surge on Wall Street as investors were hopeful for central banks potentially taking action to combat the economic impact of the coronavirus outbreak.
South Korean stocks led gains among major regional markets, with the Kospi up 2.37% while the Kosdaq added 2.13%.
Elsewhere, the Nikkei 225 in Japan also saw gains as it jumped 1.61% while the Topix index added 1.57%.
Australia’s S&P/ASX 200 was up about 1.8% in morning trade as the sectors advanced, with shares of major banking names seeing gains.
Overall, the MSCI Asia ex-Japan index traded 0.77% higher.
The Reserve Bank of Australia is expected to announce its interest rate decision at 11:30 a.m. HK/SIN. Over in Malaysia, where the country was hit by a recent wave of political uncertainty that resulted in the unexpected appointment of a new prime minister, Bank Negara Malaysia is set to issue its monetary policy statement at 3:00 p.m. HK/SIN.
Reference: CNBC, Reuters
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