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Stocks open higher after worst drop since 1987
U.S. equity markets opened higher Tuesday as investors tried to claw back some of their losses from the steepest one-day slide since the Black Monday crash of 1987.
NEW YORK - U.S. equity markets rallied Tuesday after the Federal Reserve announced it was taking action to grease the wheels of the commercial paper market, which is critical for supporting the flow of credit to businesses and households.
The gains have the major averages on track to claw back some of their losses from the steepest one-day slide since the Black Monday crash of 1987. The Dow Jones Industrial Average climbed 528 points, or 2.6 percent, while the broader S&P 500 and tech-heavy Nasdaq Composite soared 4.5 percent and 4.6 percent, respectively.
While a wave of selling earlier in the day wiped out initial gains and sent the blue-chip Dow Jones Industrial Average below 20,000 for the first time since February 2017, the three major averages all rebounded when the Fed said it had received approval from the Treasury Department to establish a commercial paper lending facility.
Shortly afterward, Treasury Secretary Steve Mnuchin said the IRS would allow taxpayers to defer payments typically due on April 15 as the pandemic curbs incomes and keeps some workers from their jobs. President Trump promised the nation "will win" its fight against the disease and the economy would return to levels "nobody has ever seen."
The upswing was a welcome break to investors after a broad selloff on Monday forced the blue-chip Dow Jones down more than 12 percent while the benchmark S&P 500 plunged nearly 30 percent below its Feb. 19 peak. The VIX, or fear index, soared to its highest level on record.
Looking at stocks, Regeneron soared after the company said it hopes to start clinical trials for a COVID-19 antibody treatment as early as this summer. Other companies working on treatments also rallied.
Boeing shares fell after a report that both the planemaker and the aviation sector as a whole were in talks for short-term government assistance. The heavily beaten-down airline sector was mixed.
Retail stocks were in focus after February sales dropped 0.4 percent from a year earlier, according to the Commerce Department, missing the 0.2 percent gain that economists surveyed by Refinitiv were expecting. Elsewhere in the space, Nordstrom announced the closure of all of its stores in the U.S. and Canada and pulled its 2020 outlook.
Ravaged oil stocks traded mixed as West Texas Intermediate crude oil was up 0.5 percent at $29.15 per barrel. Meanwhile, miners rallied as gold jumped 3.2 percent to $1,532 an ounce.
Elsewhere, a steepening yield curve lifted bank stocks as the spread between the 2-year yield and 10-year yield widened. The former climbed 6.7 basis points to 0.427 percent and the latter jumped 11 bps to 0.838 percent.
Blue-chip tech stocks also spiked.
In Europe, Britain’s FTSE rose 1.7 percent while Germany’s DAX and France’s CAC climbed 1.9 percent and 2.3 percent, respectively.
Markets were mixed across Asia with Hong Kong’s Hang Seng adding 0.8 percent, Japan’s Nikkei edging up 0.1 percent and China’s Shanghai Composite slipping 0.3 percent.