Stocks rose sharply on Wall Street Monday, clawing back some of the losses they took in a seven-day rout brought on by worries that the coronavirus outbreak will stunt the global economy.
The Dow Jones Industrial Average surged more than 700 points, while the benchmark S&P 500 climbed 2.7%, placing in on track for its best day since January 2019. The S&P 500 is coming off a weekly loss of 11.5%, its worst since October 2008 during the global financial crisis.
Despite the pickup in stocks, the bond market continued to signal worries among investors, who continued to favor low-risk assets. Bond prices climbed, pushing yields to more record lows. The yield on the 10-year Treasury note fell to 1.08% from 1.12% late Friday. That yield is a benchmark for home mortgages and many other kinds of loans. Gold, another traditional safe-haven asset, rose 2.1%.
The big bounce came after an especially wild day of trading on Friday in which the Dow sank more than 1,000 points before a late wave of buying left it down 350.
“We just got to an extremely oversold situation on Friday,” said Sam Stovall, chief investment strategist at CFRA. “Investors basically overdid the carnage and, as a result, set ourselves up for at least a near-term, reflex rally.”
The Dow climbed 747 points, or 3%, to 26,168 as of 12:45 p.m. Eastern time. The S&P 500 index rose 2.7% and the Nasdaq gained 2.8%. European benchmarks were mostly higher, and Asian markets rose broadly. The price of U.S. crude oil was up 5.2%.
The International Monetary Fund and World Bank announced simultaneously Monday that they are ready to help countries affected by the coronavirus through their emergency lending programs and other tools.
“We will use our available instruments to the fullest extent possible,” the IMF managing director, Kristalina Georgieva, and World Bank President David Malpass said in a joint statement. “International cooperation is essential.”
The statement echoed similar promises to act if necessary from some central banks, starting with the Federal Reserve on Friday and the Bank of Japan over the weekend. Some analysts now speculate that the Fed could cut rates sometime this week, before its next formal meeting March 17-18. Traders have priced in a 100% probability that the Fed will cut rates by a half-percentage point during or before its March meeting.
There were signs that the economic impact was continuing to mount. A measure of China’s manufacturing output plunged last month to its lowest level on record, as the viral outbreak closed factories and disrupted supply chains.