NEW YORK (AP) – Stocks gave up of an early surge on Wall Street and briefly dipped into the red a day after the market’s biggest drop since 2008. The Dow had been up 945 points in the early going but that gain was gone by late morning, and indexes were mixed at noon. Markets bumped up briefly after Vice President Mike Pence said the nation’s big health insurers would cover co-pays for coronavirus testing. Investors are likely to see more big swings until the number of infections from the new coronavirus decelerate, and they also want a big, coordinated response from governments and central banks.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below:
U.S. stocks, oil and other financial markets around the world clawed back some of their historic plunge from a day before amid hopes that the U.S. and other governments around the world will pump in more aid for a virus-weakened global economy.
Investors welcomed Tuesdayâ€™s reprieve but werenâ€™t pretending that this is the end to the marketâ€™s huge swings, which took the S&P 500 on Monday to its worst day since the 2008 financial crisis. Even Tuesday’s big morning gains were tentative: After spurting to a gain of 3.7%, the S&P 500 quickly gave up more than half of it.
Dizzying swings have been relentless in markets the last few weeks. Stocks had a couple days last week where they rose more than 4%, only for the bottom to give out again.
Nonetheless, hope was rising that the big support efforts from global authorities that markets have been waiting for may be on the way, at least in a piecemeal way. President Donald Trump says his administration will ask Congress for payroll tax relief and other quick measures to help support the economy amid the spread of COVID-19, which has pushed airlines to cancel flights and prodded Italy to lock down the entire country.
In Japan, a task force set up by the prime minister approved a 430 billion yen ($4.1 billion) package with support for small to medium-sized businesses.
â€œMarkets donâ€™t trade on good or bad, they trade on better or worse,â€ said Alec Young, managing director of global markets research at FTSE Russell.
â€œI would expect the authorities to pull out all the stops to reduce uncertainty,” Young said. â€œThis may be their one opportunity to do that.â€
Perhaps the most notable market move Tuesday was that Treasury yields also pushed higher in a sign that fear has receded a bit, though they remain far below where they were even a week ago.
The 10-year Treasury yield rose to 0.59% from 0.49% late Monday. A week ago, it had never been below 1%.
The S&P 500 was up 1.5%, as of 11:12 a.m. Eastern time. It recovered about one-fifth of its loss from the day before.
The recovery is pulling the stock market away from the edge of a bear market, defined as a drop of 20% from a record high. The S&P 500 is down 17.6% from its high set last month. If it can rally back to that point, it would extend the longest-ever bull market, which was born 11 years ago after the market hit bottom on March 9, 2009.
The Dow Jones Industrial Average rose 274 points, or 1.2%, to 24,125, and the Nasdaq composite was up 1.7%.
Brent crude, the international standard, rose $2.17, or 6.3%, to $36.53, while benchmark U.S. crude rose $2.11 to $33.24. Oil prices plunged 25% on Monday amid a price war between producers, who are pulling more oil out of the ground even though demand is falling due to the virus.
For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia.
The vast majority of people recover from the new virus. According to the World Health Organization, people with mild illness recover in about two weeks, while those with more severe illness may take three to six weeks to recover. In mainland China, where the virus first exploded, more than 80,000 people have been diagnosed and more than 58,000 have so far recovered.
But because the virus is new, experts can’t say for sure how far it will ultimately spread. That has investors worried about the worst-case scenario for corporate profits and the economy, where factories and supply chains are shut around the world due to quarantines and people stay huddled at home instead of working or spending.
That’s why many say the market will continue to swing sharply at least until the number of new cases decelerates.
Central banks around the world, which have done some of the heaviest lifting to prop up markets and business confidence over the last decade-plus, have already used up most of their ammunition. Several have already cut rates below zero, and the Federal Reserve’s benchmark rate is sitting at a range of 1% to 1.25%.
Traders expect the Fed to cut rates again at its meeting next week. They’re also expecting some kind of action from the European Central Bank, which meets on Thursday, even though rates on the continent are already below zero.
The limited firepower for central banks adds pressure on governments to do what they can as well. Investors are asking for quick, coordinated aid to provide support to companies and households who are going to be out income because of the virus.
For strategists at BlackRock Investment Institute, that could include generous sick-pay programs or even direct payments to households. For businesses, governments could suspend collecting tax revenue to give them some temporary relief and hold on to cash as the world waits for the outbreak to be contained.
â€œThat would prevent these temporary disruptions from turning into a full-blown global recession,â€ strategists at BlackRock Investment Institute wrote in a report.
The Associated Press receives support for health and science coverage from the Howard Hughes Medical Instituteâ€™s Department of Science Education. The AP is solely responsible for all content.