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Market Snapshot: Stocks bounce from worst day since 2008 crisis after Trump floats payroll-tax cut

U.S. stocks jump Tuesday, pointing to a partial rebound from Wall Street’s worst one-day selloff since 2008 financial crisis Read More...

U.S. stocks were sharply higher Tuesday morning, in a partial rebound from Wall Street’s worst one day selloff since 2008, on hopes for fiscal stimulus measures from Washington aimed at helping alleviate the economic impact of the COVID-19 epidemic.

A Tuesday rebound would not be unusual — Bespoke Investment Group strategists found that in the 10 previous times since 1952 that the S&P 500 fell 5% or more on a Monday, the index has gained the following day, by an average of 4.2%.

What are the major indexes doing?

The Dow Jones Industrial Average DJIA, +2.04% traded 805 points, 3.4%, higher, near 24,657, while the S&P 500 SPX, +2.30% rose 95 points or 3.5%, to trade near 2,841. The Nasdaq Composite Index COMP, +2.63% opened 293 points, 3.7%, near 8,244.

Thee Dow on Monday plunged 2,013.76 points, or 7.8%, to 23,851.02, while the S&P 500 fell 225.81 points, or 7.6%, to end at 2,746.56, near its session low. The Nasdaq Composite Index plunged 624.94 points, or 7.3%, to finish at 7,950.68. All three benchmarks suffered their biggest one-day percentage declines since 2008.

What’s driving the market?

Stock-index futures found support late Monday after President Donald Trump said in a White House news conference that he would seek payroll tax relief and other measures to help businesses deal with the coronavirus outbreak. Trump said he would announce more details Tuesday, and discuss “a possible payroll tax cut or relief, substantial relief, very substantial relief, that’s big, that’s a big number,” the Associated Press reported. However, administration officials said the White House wasn’t ready to roll out specific economic proposals, CNBC reported early Tuesday, citing administration officials.

Monday’s stock plunge was the result of fears that government attempts to contain the epidemic are also shutting down economic activity globally, while the biggest one day fall in crude oil prices since the 1991 Gulf War, after Saudi Arabia and Russia began a price war last Friday, also raised fears of a credit crisis in the energy industry.

See:Why an ‘oil shock’ sent the Dow down 2,000 points and upended global financial markets

Also read:Why U.S. shale oil producers are the real target in the Saudi-Russia price war

“My personal view is that there’s still some more downside to come, largely due to the fact that we don’t have good data on the extent of the virus in the US,” said Donald Calcagni, chief investment officer with Mercer Advisors, in an interview.

Equities markets may perk up on discussion of tax cuts, Calcagni said, “but I don’t think that’s a long-term solution. Eventually we’ll have to take it back. I think what the market really needs to see is better leadership out of the White House in terms of dealing with the virus.”

Markets are now pricing in an easing of monetary policy from the European Central Bank at its Thursday meeting this week and from Federal Reserve at next week’s policy meeting.

Meanwhile, investors are keeping close tabs on the spread of the coronavirus epidemic. Italy moved into full lockdown, with the government barring persons from leaving cities in which they reside without special permission and implementing range of other measures.

In corporate news, airlines, including American Airlines Group Inc. AAL, +4.61% , Delta Air Lines Inc. DAL, +0.32% and Southwest Airlines Co. LUV, +1.16% announced capacity reductions and other measures in response to the coronavirus outbreak.

Shares of American Airlines jumped about 6%, while Delta shares were up 2.4% and Southwest gained 2.8%.

Related: Here’s how the plunging stock market could cause a recession

What are other markets doing?

After plummeting 25% Monday, their worst day since the 1991 Gulf War, crude oil prices were on the rise. West Texas Intermediate crude for April delivery CLJ20, +8.03% on the New York Mercantile Exchange rose 8.8% to $33.87 a barrel, while May Brent crude BRNK20, +7.85%, the global benchmark, gained 9.7%, to $37.66 a barrel.

Treasury prices also retreated lifting yields, as haven flows abated. Yields, which move in the opposite direction of price, dropped sharply on Monday, sending the 10-year note TMUBMUSD10Y, 0.624% and 30-year bond TMUBMUSD30Y, 1.091% rates to all-time lows. The 10-year yield popped 15.1 basis points to 0.652%, while the 30-year yield was 21 basis points higher to 1.134%.

Gold futures GCJ20, -1.28% slid 1.3% to 1,653.50 an ounce.

In Asia overnight, the Nikkei NIK, +0.85% rose 0.85%, the China CSI 300 000300, +2.14% popped 2.1%, and the Hang Seng HSI, +1.40% was up 1.4%.

In Europe, the STOXX 600 SXXP, +1.41% rose 1.6%. Italy’s FTSE MIK Index I945, -0.15% dipped fractionally.

Which stocks are in focus?

Tesla Inc. TSLA, +4.07% shares bounced nearly 6.4% after notching a series of lows. The stock is still more than 50% higher in the year to date.

Shares of Thor Industries Inc. THO, +5.53% jumped 6% even after a hefty stock price target cut, to $75 from $95, by KeyBanc Capital analysts. In Tuesday trading, it was at about $54.

A handful of cruise operators saw shares rise despite analyst price target cuts, including Carnival Corporation CCL, +2.04% and Norwegian Cruise Line Holdings NCLH, -1.81%

See:Here’s how investors say policymakers could help businesses survive a coronavirus cash crunch

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