The raging coronavirus will close the New York Stock Exchange's floor operations on Monday, after employees tested positive for the coronavirus. (Photo by Luiz Roberto Lima-ANB/Pacific Press/LightRocket via Getty Images)
Stocks around the world rallied Tuesday amid expectations that Congress is nearing a deal to pump nearly $2 trillion of aid into the coronavirus-ravaged economy.
Top congressional and White House officials said they expect to reach an agreement Tuesday, though some issues remain. Investors have been frustrated waiting for the U.S. government to do what it can to help the economy, which is increasingly shutting down by the day after the Federal Reserve has done nearly all it can.
Signs of optimism radiated around the world. Beyond the better than 5 percent gain for the S&P 500 within the first few minutes of trading, South Korean stocks surged 8.6 percent and Germany's market returned 7 percent. Treasury yields rose in a sign that investors are feeling less fearful. Even crude oil, which has more than halved this year, rose.
The market has seen rebounds like this before, only for them to wash out immediately. Since the market began selling off on Feb. 20, the S&P 500 has had six days where it's risen, and all but one of them were big gains of more than 4 percent. After every one of them, stocks fell again the next day.
Ultimately, investors say they need to see the number of new infections peak before markets can find a bottom. The increasing spread is forcing companies to park airplanes, shut hotels, and close restaurants to dine-in customers. Altogether, estimates suggest at least 10 percent of the U.S. economy is shutting down, according to Rob Sharpe, head of investments and group chief investment officer at T. Rowe Price.
The S&P 500 was up 5.4 percent, as of 9:43 a.m. Eastern time. The Dow Jones Industrial Average rose 1,130 points, or 6.1 percent, to 19,722 and the Nasdaq was up 4.9 percent.
Economists are topping each other's dire forecasts for how much the economy will shrink this spring due to the closures of businesses, and a growing number say a recession seems inevitable.
To support the economy while health experts work to corral the virus, the Federal Reserve on Monday pledged to buy as many Treasurys and mortgage-backed securities as it takes to keep lending markets working smoothly. It's the latest in a string of extraordinary moves by the U.S. central bank.
Investors are waiting for Congress and the White House to also do what they can. They debated through the weekend and Monday on a plan to send cash to households and help support the hard-hit travel industry, among other things.
Governments and central banks in other countries around the world are also unveiling unprecedented levels of support for their economies in an attempt to limit the scale of the upcoming virus-related slump. Germany, a bastion of budgetary discipline, also approved a big fiscal boost.
Markets rose even as more dismal data came in about the global economy.
"Everyone was prepared for a set of shockers, and that is precisely what we got, but they are not a surprise," said Chris Beauchamp, chief market analyst at IG. "It is at times like this that the market's propensity to look forward is demonstrated most effectively."
A further boost to sentiment has come from the news that China is preparing to lift the lockdown in Wuhan, the epicenter of the outbreak, and from Italy reporting a reduction in the number of new cases and coronavirus-related deaths.
"It's still early days, of course — perhaps investors can start to envisage life beyond the coronavirus," said Craig Erlam, senior market analyst at OANDA Europe. "That could make stocks look a little more attractive, although anyone jumping back in now will need to have nerves of steel."
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. Those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems. Recovery could take six weeks in such cases.
Kevin Book, Managing Director at Clearview Energy Partners, breaks down the factors that impact the price of gas and what this means for renewable energy initiatives.
Kelsey Sutton, streaming editor at Adweek, talks about the offers going on during Disney+ Day and what the entertainment giant is doing to boost subscriber growth.
We are just one day away from what has been called the most influential tech event in the world. CES 2022 will officially kick off on Wednesday in Las Vegas, but the annual tech summit is being impacted by COVID-19, like so many other recent events. The Consumer Technology Association originally planned for a hybrid event to take place from January 5-8, with some in-person events and some virtual; however, a few big-name companies announced they will not be attending in-person, so the CTA decided to shorten the event by one day, with it now ending on Friday. Consumer electronics senior analyst Will Greenwald joins Cheddar News' Closing Bell to discuss.
Stocks closed mixed Tuesday, with the Dow hitting a record close, but the tech-heavy Nasdaq remained under pressure as bond yields continue to rise. Meanwhile, the S&P 500 closed lower, just shy of a record high. Nancy Prial, Co-CEO & Senior Portfolio Manager of Essex Investment Management joins Cheddar News' Closing Bell to discuss today's close, market predictions for 2022, and more.
This year - for the first time in five years - store openings might actually top announced store closings. Reports show that we're seeing companies opening up new locations by the dozens, and by the hundreds. The need for customers to touch and feel its' products is only one factor in the equation. John Harmon, senior analyst at Coresight Research, joins Cheddar News' Closing Bell to discuss.
Harry Yeh, Managing Director at Quantum Fintech Group, joins Cheddar News' Closing Bell, where he explains why his firm has a target estimate of $400,000 for Bitcoin this year.
California's new composting law will affect what residents do in their kitchens. As of this week, Californians will have to recycle excess food in an effort to reduce emissions caused by food waste. Cities and counties will turn recycled food into compost or use it as a renewable energy source. California's new law is the largest mandatory residential food waste recycling program in the country. Rachel Wagoner, Director of the California Department of Resources, Recycling and Recovery called the law 'the biggest change to trash' since recycling started in the 1980s. She joined Cheddar Climate to discuss.
Like the big changeover to e-commerce for retail, the COVID-19 pandemic has moved car buying trends to the digital showroom. Karl Brauer, an executive analyst at iSeeCars.com, joined Cheddar to talk about the "mindset shift" in consumers and businesses to order-based systems in the United States (something more common in other countries). While more than 60 percent of consumers still prefer to visit dealerships in-person, Brauer noted that consumers are better off ordering a car to spec, which would also help improve supply constraints. "It's really bad right now to be building cars and not really knowing who's going to buy them or when they're going to sell," he said. Manufacturing a car to order would maximize the efficiency of obtaining materials through the supply chain rather than "shotgunning it" at dealerships.
Mark MacDougall, attorney and former prosecutor with the criminal division of the Department of Justice, joined Cheddar to discuss the fraud conviction of Theranos founder Elizabeth Holmes. MacDougall addressed Holmes' stance that what she did was no different than any other Silicon Valley startup's approach to business and how this will shake out for the industry going forward. "I can't imagine it doesn't have some salutary effect on entrepreneurs and people involved in new ventures going forward," he said. Holmes was found guilty on 4 of 11 counts, with each carrying a maximum of 20 years in prison, but MacDougall explained that the lengthy prison sentences were unlikely.
