The Dow surged 1,985 points on Friday — its biggest single-day gain ever — as President Trump declared a national emergency to fight the coronavirus.
The record rally — which came a day after the blue-chip index suffered its worst drop in more than three decades — came late in the afternoon after Trump unveiled a $50 billion war chest to fight the deadly bug.
The Dow Jones industrial average rose 1,985 points, or 9.4 percent, to close at 23,185.62 — almost enough to erase Thursday’s heart-stopping drop of 10 percent, or 2,352.6 points.
The S&P 500 and Nasdaq, which likewise have been battered into bear territory this week as fears about the epidemic’s spread continued to escalate, both jumped 9.3 percent.
“We finally got a grownup response from this White House,” said Alexander Craig of Tiverton Trading. “It looks like there’s going to be actual stimulus, which is what was needed because this crisis was all about confidence. [The president] finally acknowledged this virus and he’s finally throwing money at it.”
Still, all three major indexes were off at least 8 percent this week despite Friday’s rally as fears persist about the ability of authorities worldwide to battle the deadly contagion.
“I think what we need is somebody to calm us down, like our mom and dad tell us it’s gonna be OK,” said Jim Paulsen, chief investment strategist at the Leuthold Group.
Stocks had plunged on Thursday amid concerns that President Trump’s coronavirus stimulus plan, outlined in a Wednesday night speech, was lacking in details and assurances that it would be passed by Congress.
The Federal Reserve likewise failed to soothe investors’ nerves last week when it made its first emergency rate cut since the financial crisis. On Friday, it said it would step up its planned purchases of Treasury bonds, buying more than $30 billion in a bid to ease market hiccups.
Wall Street has become particularly worried that demand for Treasury bonds in recent days has sputtered even as stocks tumble — a potential signal of big banks and investment funds being caught in a liquidity crunch. Earlier this week, the Fed said it would inject more than $1.5 trillion into short-term borrowing markets to avoid a meltdown.
Stocks got pummeled at the start of the week when an oil price war broke out between Russia and Saudi Arabia, compounding fears about the coronavirus tanking the global economy.
“We’ll take an up day. It’s better than watching it go down,” said Zach Abraham, chief investment officer at Bulwark Capital Management.
“An up move like today is as emblematic of how broken this market is as yesterday’s move was,” Abraham added. “This is a classic bear market rally. The volatility out there is insane. The market is pricing in daily moves of 5 percent or greater for the next 30 days. God help us if that’s true.”