Dow advances 1,400 points in hopes that $ 2 trillion coronavirus aid program will be approved soon

Reuters

• US stocks climbed Tuesday in hopes that an economic aid program for coronaviruses will arrive soon.
• Stocks rebounded from declines on Monday even after the Federal Reserve took unprecedented steps to support the US economy amid the fallout from the coronavirus epidemic.
• Learn more about Business Insider.

US stocks rose Tuesday, bouncing more than three-year low Monday, on the growing optimism of investors regarding the forthcoming coming of a set of economic aid for coronaviruses.

In day-to-day trading, futures on the three main US indices jumped more than 5%, triggering so-called limitation trading halt.

The gains continued when House Speaker Nancy Pelosi said on a call to CNBC on Tuesday morning that there were “real optimism” that an agreement could be reached in the next few hours. Later, the majority leader in the Senate, Chuck Schumer said the talks were on the 2-yard line.

Here is where the main American indices were at 2:25 p.m. ET Tuesday:

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“It is very likely that we will see some sort of agreement coming this week” as policymakers understand how urgent it is, Seema Shah, chief strategist at Principal Global Investors, told Business Insider. Until there is a clear government announcement, markets will likely have a hard time keeping their gains, Shah said.

The Washington Post reported early Tuesday that majority leaders were on the verge of reaching an agreement on a $ 2 trillion coronavirus rescue program after several unsuccessful attempts to obtain one through Congress. The Secretary of the Treasury, Steven Mnuchin, and the Senate leader for minorities, Chuck Schumer, were optimistic that an agreement would soon be reached, the report said.

Stocks plummeted on Monday when executives were unable to agree on a deal to curb the economic fallout from the coronavirus pandemic. The pressure has increased as many states impose lockouts to stop the spread of COVID-19, the disease caused by the virus.

Tuesday’s rally came after unprecedented actions announced Monday by the Federal Reserve to help the economy in the midst of the boom, including unlimited bond buying and assistance to local governments and businesses. But the epidemic has already had an impact … US economic activity in March fell the most since 2009, data released Tuesday shows.

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In the future, the details of the stimulus package and the targeted assistance it offers will be extremely important, according to Shah. If the plan focuses on keeping workers employed, “it will change the outlook quite significantly and the markets will like it,” said Shah.

There will also likely be market volatility until the number of COVID-19 peaks in the United States, Jeff Kleintop, chief global investment strategist at Charles Schwab, told Business Insider.

The stimulus package – designed to prevent mass layoffs and bankruptcies while the United States is fighting the epidemic – is “really just a bridge” so far, he said. It’s not going to bring the economy back, “it just keeps a bad problem from getting worse in the short term,” said Kleintop.

Oil could be a better indicator of the economic environment as opposed to investor sentiment, according to Kleintop. The product advanced early in the day, but cut losses as the glut of supply and weakening demand due to the coronavirus pandemic outpaced US government efforts to stimulate the economy.

The US dollar weakened against other currencies in developed and emerging countries on Tuesday, a good sign that the Fed is ahead of the dollar shortage, according to Kleintop. Gold, the safe haven asset, also jumped Tuesday after a recent decline.

“The bottom line is that this market has been extremely dangerous since February,” wrote Thomas Lee of Fundstrat in a note on Tuesday. “But there are glimmers of hope.”

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