U.S. stocks soared Tuesday as top government officials and legislators sought a $1 trillion stimulus package to counter the economic effects of the coronavirus, rebounding after the second-worst day for equities in history.
Treasury Secretary Steven Mnuchin met with Republican senators Tuesday to discuss a trillion-dollar package that would include sending checks directly to households.
The Dow Jones Industrial Average closed up 5.17%, or more than 1,000 points.
The S&P 500 and Nasdaq composite closed up 5.98% and 6.23%, respectively.
Yields on 10-year Treasury bonds were also up more than 1%.
The markets responded positively to news that the Treasury will allow $300 billion in tax deferrals to combat the coronavirus pandemic. Individuals can defer up to $1 million, and corporations can defer $10 million in tax payments to the federal government without being charged for penalties and interest for 90 days beyond April 15.
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The Federal Reserve acted on Tuesday by setting up a special entity to purchase short-term debt issued by corporations to help keep afloat companies facing a credit crunch because of the coronavirus pandemic. The program, the Commercial Paper Funding Facility, is authorized under the Fed’s powers to lend during emergencies and was approved by Mnuchin.
Despite the gains made in stocks, volatility in the markets is expected to return as bad news from the coronavirus comes out. New York City Mayor Bill De Blasio told reporters that he might require city residents to shelter in place within the next 24 or 48 hours because of the spread of the virus, according to CNN. Also, a new report by the U.S. Travel Association projects that decreased travel due to coronavirus will inflict an $809 billion total hit on the U.S. economy and eliminate 4.6 million travel-related American jobs this year.
