NEW YORK – The Dow Jones Industrial Average on Tuesday surged to its biggest percentage gain - 11.37 percent - since 1933 amid expectations that congressional Democrats and US President Donald Trump’s administration will soon reach agreement on a massive $2 trillion coronavirus rescue package.
That leading Wall Street blue-chip indicator closed up 2,113 points to 20,705, with Chevron (23 percent higher), American Express (up 22 percent), Boeing (21 percent higher) and McDonald’s (up 18 percent) leading the way.
The single-day point gain was the biggest in the 123-year history of the Dow.
The S&P 500, a broader-based, large-cap index, rose 9.38 percent to 2,447, while the tech-heavy Nasdaq climbed 8.12 percent to 7,418.
Despite its huge gain on Tuesday, the Dow is still roughly 30 percent off its intra-day, 52-week high of 29,568.57, which was set on Feb. 12.
Stocks were buoyed in part by remarks from Democratic lawmakers about the imminent approval of a stimulus package.
Senate Minority Leader Chuck Schumer on Tuesday used American football terminology to express how close the negotiators are to reaching a bipartisan deal.
“Last night, I thought we’re on the five-yard line. Right now we’re on the two. As I also said last night, at this point, of the few outstanding issues, I don’t see any that can’t be overcome,” he said on Capitol Hill.
The speaker of the House of Representatives, Nancy Pelosi, said for her part that there is real optimism that a deal can be reached on Tuesday.
Investors on Monday reacted negatively to a lack of consensus among Democrats and Republicans on a rescue package, sending stocks tumbling despite aggressive moves announced by the Federal Reserve to shore up the US economy.
The central bank’s actions included an announcement that there would be no limits on the amount of government-backed debt (Treasury bonds and mortgage-backed securities) it will purchase to “support smooth market functioning.”
It also said it is relaunching a crisis-era program - the Term Asset-Backed Securities Lending Facility, or TALF - to encourage lending to small businesses and households and unveiled two new lending facilities to support lending for large companies.
In addition, the Fed said Monday it would soon roll out a so-called Main Street Business Lending Program, which will promote lending to eligible small- and medium-sized businesses.
Wall Street also seemingly reacted positively to remarks Tuesday by Trump, who told Fox News that he would like the country “opened up and just raring to go by Easter (April 12).”
The president, who is up for re-election in November, had earlier taken to Twitter on Sunday night to say, “we cannot let the cure be worse than the problem itself. At the end of the 15-day period, we will make a decision as to which way we want to go!”.
Trump’s indication of a policy shift (he issued guidelines on March 16 urging Americans to avoid non-essential travel, stay away from bars and restaurants, work or study from home where possible and avoid gatherings of 10 or more people for 15 days) comes amid a spike in confirmed Covid-19 cases in the US (currently totaling more than 53,000) and coronavirus-related deaths (now at 685).
On its current pace, the number of confirmed coronavirus cases in the US will soon surpass those in China (now at 81,171), where the virus originated.
The epicenter of the disease in the US is New York state, which like California and Illinois has imposed a near-total lockdown in a bid to slow down infection rates.
Stock markets in other regions also responded positively to the hopes for a US stimulus deal.
The pan-European Stoxx 600 rose 8.4 percent on Tuesday, its biggest one-day gain since 2008. Asian stocks also were sharply higher, with Japan’s Nikkei 225 index up 7 percent.