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Stocks rise after Wall Street's worst day in 12 years

Posted at 8:58 AM, Mar 10, 2020
and last updated 2020-03-10 11:01:35-04

Stocks are rebounding after Monday's historic plunge produced the worst day of losses since the financial crisis in 2008. Investors are hopeful that a fiscal stimulus package from the federal government will ease the economic impact of the widening coronavirus outbreak.

The Dow rose 741 points, or 3.1% to 24,592 in early trading. The broad-based S&P 500-stock index rose 2.8% and the tech-heavy Nasdaq composite rose 2.6%.

Tuesday's rebound erases only some of Monday's nearly 8% plunge, which marked the biggest single-day point drop in the history of the Dow and the largest percentage decline since 2008. Economists have raised the likelihood of a recession, warning that American consumers wary of the virus could pare spending on travel, restaurants, sporting events and other businesses.

Investors are banking on government intervention to shore up the economy, with the Trump administration considering a payroll tax cut or targeted aid to affected industries.

"Equity markets have partially recovered from yesterday's losses amid growing expectations of U.S. fiscal stimulus," TD Securities analysts said in a note.

Through Monday's close of trading, the Dow had shed about 19% of its value since its most recent high. Investors are grappling with uncertainty over the potential impact of the coronavirus. Anti-disease controls that shut down Chinese factories are spreading as the U.S. and European countries close schools, cancel public events and impose travel controls.

Italy, the hardest-hit country outside of China, announced that travel controls imposed earlier on its north would be extended nationwide. In other countries trying to contain the coronavirus, Ireland canceled St. Patrick's Day parades and Israel ordered visitors quarantined ahead of Passover and Easter, one of the busiest travel periods of the year.

"We are grappling with the problem of pricing epidemic-related uncertainty," said Arthur Kroeber of Gavekal Research in a research note. "Eventually, rationality will return and equity prices and bond yields will rebound to more justifiable levels. The key question then becomes, just when is 'eventually'? We cannot answer that question."