Dow jumps more than 300 points after suffering its third-worst day ever

Stocks jumped on Tuesday as Wall Street tried to recover from its worst day in more than 30 years amid signs of potential fiscal stimulus and progress on a possible treatment  for the coronavirus.

The Dow Jones Industrial Average rose more than 300 points, or about 1.7%. The S&P 500 gained 2% while the Nasdaq Composite advanced 2.1%. At one point, the Dow was up more than 600 points. 

Trading overnight was volatile with Dow futures giving back more than 1,000 points as investors try to weigh the uncertain economic impact of the coronavirus outbreak.

Those moves came after Politico and The Washington Post reported that Treasury Secretary Steven Mnuchin will ask congressional lawmakers for a stimulus package of $850 billion or more to help the U.S. economy grapple with the impact of the coronavirus.

Biotech giant Regeneron, meanwhile, said Tuesday morning that it’s aiming to have doses of a potential drug for COVID-19 ready to start human clinical trials by early summer. The announcement, which represents a marked acceleration in the company’s drug timeline, sparked a 10% rally in the company’s equity in premarket trading.

Those wild moves came after President Donald Trump tweeted: “The United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. We will be stronger than ever before!”

At least 4,281 cases have been confirmed in the U.S. along with more than 70 deaths, according to data from Johns Hopkins University. President Donald Trump also said the crisis could stretch into August, adding the administration may look at locking down “certain areas.”

The Dow and S&P 500 had on Monday their biggest one-day losses since 1987, falling 12.9% and 12%, respectively. It was also the Dow’s third-worst day ever. The Nasdaq Composite had its biggest one-day plunge ever, tumbling 12.3%.

“Yesterday was a real washout,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “I think we’ll have a recession. It’s just a question of how steep it will be.”

The Cboe Volatility Index (VIX) — Wall Street’s preferred fear gauge — posted its highest-ever close at 82.69. That tops the financial crisis’ peak of 80.74. On Tuesday, the VIX traded down 2.3 points at 80.40.

Wall Street’s drop on Monday came even after the Federal Reserve slashed interest rates to near-zero on Sunday and announced a $750 billion asset-purchasing program. It also came as the number of coronavirus cases jumped in the U.S. 

“Although the contemporary crisis is loaded with bad news, this has not been its primary problem. It’s the ‘unknown,'” said Jim Paulsen, chief investment strategist at The Leuthold Group, in a note. “Not even health experts understand what this is or where it is headed, and that is the worst possible outcome for investors.

—CNBC’s Thomas Franck and Eustance Huang contributed to this report.

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Source: https://www.cnbc.com/2020/03/16/us-stock-futures-rise-slightly-following-dows-third-worst-day-ever.html

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