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Stocks Close Higher After Dow's Best Day in 87 Years

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03/25/2020 | 03:21pm EDT

By Akane Otani, Caitlin Ostroff and Frances Yoon

U.S. stocks soared in frenetic trading Wednesday, heading for their first back-to-back gains since February, after lawmakers and the White House reached an agreement on a $2 trillion stimulus package.

The Dow Jones Industrial Average jumped 495 points, or 2.4%, to 21200, extending a rally that propelled it to its biggest one-day advance since 1933 just a day earlier. The S&P 500 was up 1.2% and the Nasdaq Composite fell 0.5%, its gains slipping away in the last few minutes of trading.

Investors have been eager to see the government commit to further aid for the economy as the growing coronavirus pandemic has shut factories, sent students home from universities and upended travel for millions of Americans. The pending legislation is likely to include direct financial payments to many Americans, as well as loans to businesses -- reassuring some who have been worried about the economic fallout from the pandemic.

"We're in a global economic freeze, and we don't know how long it'll take to thaw," said Stephen Dover, head of equities at Franklin Templeton. Mr. Dover added that while it has been comforting to see governments and central banks roll out measures to mitigate the economic fallout from the pandemic, "we still don't know how long people are going to stay at home, and that's the big swing factor."

Uncertainty about the pandemic and its trajectory, combined with a spike in trading volumes, have contributed to big moves both up and down across markets the past few weeks -- something analysts and investors say is likely to be common for the foreseeable future.

Shares of airlines and aerospace companies jumped Wednesday on bets that the industry would be one of the major beneficiaries of the stimulus package.

Dow heavyweight Boeing soared 30%, giving a boost to the blue-chip average. United Airlines added 14% and American Airlines rose 13%.

Energy stocks rallied, with the S&P 500 energy sector up 7.5%. Oil producers and exporters have been one of the worst-hit groups in the selloff of the past few weeks, hurt by both worries about falling demand for oil due to the pandemic and a price war among global producers.

Markets in Europe were choppy: The pan-continental Stoxx Europe 600 finished the day up 3.1% after swinging between losses and gains earlier.

Fresh survey data Wednesday showed that German business sentiment plunged further than initially estimated in March, adding to investors' concerns about a deep recession in the eurozone.

Globally, cases of infection surpassed 450,000 Wednesday, with more than 18,900 dead, as the disease reached far corners of the world including the U.S. territory of Guam. In the U.K., Prince Charles, the 71-year-old heir to the British throne, tested positive for the coronavirus. The Tokyo 2020 Olympics were postponed until 2021.

"It's a health problem and that needs to be the primary thing the market feels has been addressed, meaning the infection rate has peaked and we get a sense of the damage done by the shutdown," said Hani Redha, multiasset portfolio manager at PineBridge Investments. "Without that, it's very difficult for the market to assess the downside."

Earlier in the day, major markets in Asia closed higher, with Japan's Nikkei Stock Average advancing more than 8% as investors cheered the agreement between U.S. lawmakers and the Trump administration.

"This is definitely a step in the right direction," Paul Sandhu, head of multi-assets quant solutions for the Asia-Pacific region at BNP Paribas Asset Management. "What we needed right away was an economic buffer essentially stabilizing the downside risk for the next three or four months while the virus hopefully starts to dissipate."

Some investors in Asia are buying stocks for the first time in weeks, according to Catherine Yeung, investment director at Fidelity International in Hong Kong.

However, Ms. Yeung characterized this as "bottom-fishing," or bargain-hunting, and said markets could stay volatile as the pandemic continued to spread globally.

"It's too early to tell whether we are on a path to recovery" economically, Ms. Yeung said. "What will be telling are the rescue packages we see in the weeks and months [ahead] that will provide unprecedented support for jobs and wages."

Write to Akane Otani at akane.otani@wsj.com, Caitlin Ostroff at caitlin.ostroff@wsj.com and Frances Yoon at frances.yoon@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.12% 22653.86 Delayed Quote.-20.53%
NASDAQ 100 -0.40% 8049.30679 Delayed Quote.-13.80%
NASDAQ COMP. -0.33% 7887.25968 Delayed Quote.-17.83%
NIKKEI 225 2.13% 19353.24 Real-time Quote.-24.67%
S&P 500 -0.16% 2659.41 Delayed Quote.-17.69%
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