US markets will remain in focus today, with all indices closing higher on Tuesday after a volatile session.
Context: The Dow surged around 1,200 points on Tuesday, delivering its third-highest gain in points on record after President Trump announced plans to take some “major steps” to address the possibility of an economic slowdown due to the coronavirus outbreak.
Details: US President Donald Trump announced “a possible payroll tax cut or relief” by persuading the Congress for a fiscal stimulus package. Global markets have been facing sharp declines in recent weeks due to the rapid spread of coronavirus around the world, resulting in widespread supply chain disruptions and the enforcement of drastic lockdown measures in Italy.
Markets are now expecting monetary easing from the ECB (European Central Bank) at its meeting on Thursday. Investors also expect the US Federal Reserve to cut rates further at its policy meeting scheduled for next week. The Bank of England cut rates by 50 basis points this morning.
The number of coronavirus cases exceeded 118,000 worldwide, as the outbreak spread to more countries, causing further economic disruption.
US stocks closed higher on Tuesday, with the Dow rising 1,167 points to 25,105 and the Nasdaq 100 up 5% to 8,344.25. The S&P 500 gained 4.9% to close at 2,882.23. The 30-stock benchmark had shed more than 2,000 points on Monday, with all three benchmarks suffering their largest single-day percentage declines since the financial crisis of 2008.
Oil stocks made some recovery during Tuesday’s trading, with the midsized Occidental Petroleum surging around 15% despite cutting its dividend and capital budget. Banking stocks, including JPMorgan Chase and Bank of America, also surged around 8% each. Airline and cruise stocks climbed after President Trump announced plans to provide aid to companies in these segments. Shares of American Airlines and United Airlines both climbed more than 12%, while Carnival’s stock rose 8%.
In other news, yields on the 10-year US note, which dropped to a record low on Monday, rose 30 basis points to 0.80% on Tuesday.
Why it matters: There seems to be downward pressure again on US markets, with stock futures pointing to a lower start on Wall Street. Investors await economic releases from the country, including reports on inflation rate and budget statement.
What to watch: US core consumer prices, which rose 0.2% in January, are expected to remain unchanged in February. Markets are expecting an exponential increase in America’s budget deficit, from $32.6 billion in January to $236.3 billion in February.
Other Market: Most European indices were trading higher on Monday, with the FTSE 100, German 30 and French 40 up 0.69%, 1.62% and 1.52%, respectively, at 9:30am GMT today.