Tuesday's Stock Market Close: US Equities Skyrocket, Dow Soars 2,100 Points, On Hopes For New Stimulus Bill

U.S. stocks skyrocketed on Tuesday on hopes that lawmakers in Washington will soon reach an agreement on a $2 trillion stimulus package to save the economy from the ravages of the coronavirus.

The Dow Jones Industrial Average soared 2,112.98 points to 20,704.91, while the S&P 500 gained 209.93 points to 2,447.33 and the Nasdaq Composite Index rose 557.18 points to 7,417.86.

The Dow logged the biggest one-day point gain in its history.

Volume on the New York Stock Exchange totaled 6.28 billion shares with 2,756 issues advancing, one setting a new high, and 279 declining, with 85 setting new lows.

Active movers were led by Ford Motor (F), Bank of America (BAC) and Advanced Micro Devices Inc. (AMD).

House Speaker Nancy Pelosi told CNBC there is “real optimism” in Congress over a stimulus deal. “We think the bill has moved sufficiently to the side of workers,” she said.

“U.S. equities are responding to the possibility of this gargantuan fiscal stimulus package and some certainty in the political situation,” said Stephen Dover, head of equities at Franklin Templeton.

“From a market perspective … it feels like we’re coming to the end of it,” said Michael Novogratz, CEO of Galaxy Digital. “It doesn’t necessarily mean the market’s going to go up, but a lot of that crazy volatility is kind of coming out.”

“Sentiment has improved, but to call it a turning point is too strong a word for now,” said James McCormick, global head of desk strategy at NatWest Markets. “It is more of a tug-of-war. Policy bazooka is in place, but will be fighting against very weak data and still worrying trends on Covid-19 data. We are more neutral on risk assets now.”

Some U.S. economic data were troubling.

IHS Markit’s flash U.S. services purchasing managers index fell to an all-time low of 39.1 in March falling from a reading of 49.4 in February.

IHS Markit’s PMI for the domestic manufacturing sector fell to 49.2 in March from 50.7 in February.

The Commerce Department said on Tuesday that new home sales fell 4.4% to a seasonally adjusted annual rate of 765,000 units in February.

“I think the limit of time as to how long these [stimulus] negotiations will go on, will be set by the initial unemployment claims that come out on Thursday,” said Steven Ricchiuto, chief U.S. economist at Mizuho Securities. “I don’t think there’s any representative in the House or … in the Senate who’s gonna be willing to sit back and debate a lot of issues … and political talking points when you have what could be essentially as many as 3 million people filing for unemployment insurance.”

The euro zone economy suffered “an unprecedented collapse” in business activity in March – the provisional purchasing manager’s index survey data from IHS Markit plunged from rom 51.6 in February to 31.4 in March. The March figure was the lowest ever reported.

An independent survey by the China Beige Book suggested China’s economy may have contracted by 10% to 11% in the first quarter.

China on Tuesday said it will end the two-month lockdown on Wuhan, epicenter of the coronavirus pandemic, on Apr. 8.

Overnight in Asia, markets were mixed. China’s Shanghai Composite gained 2.34%, while Hong Kong’s Hang Seng jumped 4.46%, and Japan’s Nikkei-225 surged 7.13%.

In Europe markets traded higher as Britain’s FTSE-100 jumped 6.52%, France’s CAC-40 gained 6.32% and Germany’s DAX surged 8.69%.

Crude oil futures gained 2.1% at $23.85 per barrel, Brent crude slipped 0.44% at $29.61. Gold futures jumped 6.08%.

The euro rose 0.41% at $1.0772 while the pound sterling jumped 1.73% at $1.1743.

The yield on the 10-year Treasury gained 6.81% to 0.816% while yield on the 30-year Treasury rose 1.86% to 1.369%.