The Dow rallied more than 900 points — and then gave up most of the gains — as an oil price war and the coronavirus epidemic continued to roil Wall Street after Monday’s massive market rout.
The Dow Jones industrial average jumped as much as 945.70 points, or 3.9 percent, in early trading but wiped out the gains and briefly fell into the red by midday. The blue-chip index hit a low of 23,690.34 — 0.6 percent below Monday’s close. It was recently up 207.61 points, or 0.9 percent, at 24,058.63.
The S&P 500 and Nasdaq composite similarly jumped as much as 3.7 and 3.6 percent, respectively, before turning negative and then climbing again. The indices recently were each trading up 0.4 and 0.6 percent, respectively.
The turbulence followed President Trump’s Monday evening pledge to unveil “very dramatic” measures to stanch the economic bleeding from the coronavirus crisis, including a payroll tax cut and sick leave funding. But the prospect of a fiscal stimulus probably had little influence on investors trying to find the bottom of the market in another volatile week, analysts said.
“On any ordinary day, gains of a couple of percent in indices would be a solid day but given the scale of yesterday’s decline, it could well be nothing more than a dead cat bounce,” Craig Erlam, a senior currency analyst at OANDA, wrote in a Tuesday commentary.
The Dow shed more than 2,000 points and the S&P suffered its worst day since December 2008 on Monday after Saudi Arabia said it would boost oil production and slash prices, which caused crude oil prices to plummet. The nascent price war came on top of fears about the coronavirus outbreak damaging the global economy.
Dow futures rose more than 1,000 points for part of Tuesday morning amid hopes of a stimulus, but they pared those gains after CNBC reported that the White House was not ready to announce a specific economic plan.
Trump also called Saudi Crown Prince Mohammad bin Salman early Tuesday before Saudi Arabia announced that it would boost its crude oil supply to record highs next month, according to news reports.
Tuesday’s early jump likely had more to do with the oversold state of the market rather than Trump’s apparent efforts to reassure Wall Street, according to observers.
“It’s premature to say we’re out of this,” said Sahak Manuelian, managing director and head of equity trading at Wedbush Securities.
“I think people just want to see a better handle on who’s infected, who’s not, how many people are infected, do we have enough tests out there — which we currently don’t,” Manuelian added.
The government will have to offer more concrete details of any stimulus before investors believe help is actually on the way, according to Eric Marshall, director of research for Hodges Capital Management.
“As dysfunctional as Washington is, I don’t think Wall Street’s going to give them much benefit of the doubt until they actually see the proof in policy being implemented,” Marshall said.
Crude oil recovered Tuesday amid reports that Russian officials may be open to cooperating with the Organization of the Petroleum Exporting Countries after a breakdown in relations between Russia and Saudi Arabia.
Russia’s Energy Ministry is set to meet Wednesday with the nation’s oil companies to discuss cooperation with OPEC, according to Reuters. OPEC member Saudi Arabia moved to flood the oil market after Russia rejected a proposal from the group to cut global production.
Brent crude futures had jumped 5.4 percent to $36.23 a barrel by 11:56 a.m., while West Texas Intermediate futures were recently up 5.9 percent at $32.97 a barrel after plunging 25 percent Monday.
