The US stock market bounced back sharply and recorded the largest one day gain since 1933 as investors became more optimistic as a result of the multi-trillion stimulus program.
The Dow Jones Industrial Average marked a 12% increase in Tuesday trading, led by oil giants Chevron and Exxon.
The Nasdaq index surged 8.1% and the S&P 500 gained 9.4% as investors returned to buying major stocks after last month’s historic crash.
The US stock market rebounded on prospects of returning to normal economic activity in the not too distant future along with news that the Trump administration is likely to sign a $2 trillion stimulus package.
“We’re looking forward to closing a bipartisan deal today,” Treasury Secretary Steve Mnuchin told reporters on Tuesday morning.
Mnuchin spent the day meeting with members of Congress from both parties to negotiate the details of the stimulus package.
Some analysts believe it’s still too early to say whether the markets have started stabilizing because many big names are laying-off their employees en-masse and closing production facilities in the wake of the coronavirus outbreak.
“From a market perspective . . . it feels like we’re coming to the end of it,” Michael Novogratz, CEO of Galaxy Digital, told CNBC‘s Squawk Box.
“It doesn’t necessarily mean the market’s going to go up, but a lot of that crazy volatility is kind of coming out.”
Oil prices bounced back slightly after hitting the lowest levels seen since the Gulf war in 1987.
Brent crude jumped to $30 a barrel and US oil stood at around $24. The big inventory draw in the last week added to investor sentiments.
The American Petroleum Institute (API) expects a crude oil inventory draw of 1.247 million barrels for the week ending March 21.
The most beaten-down stocks like MGM Resorts, Norwegian Cruise Lines, and American Airlines Group are likely to make a big recovery in the coming days on prospects of reopening the economy by this Easter.
Software, internet, and online retailers have also been gaining investors’ confidence over the past few days.