US stocks bounced back from last week’s coronavirus-fueled rout Monday as central bankers indicated they would address the outbreak amid fears that it could slash global growth.
The Dow Jones Industrial Average jumped as much as 810.01 points, or 3.2 percent, to a high of 26,224.37, marking a comeback of sorts from Wall Street’s worst week since 2008 in which the blue-chip index shed more than 3,500 points.
The S&P 500 and the Nasdaq composite each climbed as much as 2.9 percent amid hopes of a stimulus to stanch the economic impact of the deadly coronavirus epidemic.
“This will be another wild week for financial markets, but optimism is growing that central bank intervention will prop up risky assets and that scientists and drug companies are getting closer to developing test treatments and vaccines,” Ed Moya, senior market analyst at OANDA, wrote in a Monday commentary.
Central banks tried to buoy investors’ outlooks in recent days by saying they would take steps to address the economic fallout of the coronavirus outbreak, which has disrupted global supply chains and reduced tourism around the world.
But the optimism was tempered somewhat Monday morning when the Organization for Economic Cooperation and Development warned that the coronavirus epidemic could slash this year’s global growth in half if it spreads further outside China.
The likelihood that the virus will put the brakes on growth “could cause analysts to pencil in very low economic growth for a few quarters or even a decline in output,” David Kelly, chief global strategist at JPMorgan Funds, wrote in a Sunday note. “For the rest of the world, it should delay the rebound that was expected following a relaxation of trade tensions entering the New Year.”
The US Federal Reserve, the Bank of England, the Bank of Japan and the European Central Bank have all said they are ready to take action as needed to address the impact of the coronavirus epidemic.
President Trump pressured the Fed to pull the trigger Monday, saying the bank and chair Jerome Powell were “slow to act.”
“Other Central Banks are much more aggressive,” Trump said on Twitter. “The U.S. should have, for all of the right reasons, the lowest Rate. We don’t, putting us at a competitive disadvantage.”
European markets showed signs of volatility Monday as stimulus hopes clashed with fears about slower growth.
London’s FTSE 100 index, Paris’ CAC 40 and Germany’s DAX all climbed in early trading but slipped into the red after the OECD released its report about the virus. The FTSE finished up 1.1 percent and the CAC closed up 0.4 percent, but the DAX ended the day down 0.2 percent.
Asian markets showed signs of a rebound despite worries about the outbreak worsening outside China. Japan’s Nikkei 225 index closed up 0.9 percent, while the Shanghai Composite jumped 3.1 percent and South Korea’s Kospi gained 0.7 percent.
World leaders have urged investors to take a deep breath as coronavirus panic gripped stock markets. Powell has said the US economy’s fundamentals “remain strong,” and the head of the World Health Organization reportedly suggested the markets were reacting irrationally to the coronavirus epidemic.
“Global markets … should calm down and try to see the reality,” WHO Director-General Tedros Adhanom Ghebreyesus told CNBC on Sunday. “We need to continue to be rational.”
With Post wires
