NEW YORK (AP) - Wall Street roared back from its worst day in 30 years Friday with a broad rally that sent the Dow Jones Industrial Average nearly 2,000 points higher — its biggest point gain ever — after President Donald Trump declared the coronavirus pandemic a national emergency.
The Dow's gains doubled in the last half-hour of trading as Trump made his remarks, giving the index its largest percentage gain since 2008 and capping a rally that recouped many of the losses from a day earlier. That's when the index saw its worst slide since the Black Monday crash of 1987 and European indexes had one of the worst drops on record. The major indexes each closed with gains of more than 9%.
The turnaround wrapped up a week of brutal losses on Wall Street amid heightened fears that the virus outbreak will lead to a global recession. Investors have been clamoring for strong action from the U.S. government to combat the economic impact of the outbreak on businesses and workers. All told, the Dow jumped 1,985 points, or 9.4%.
News that the White House and Congress were close to announcing an agreement on a package to provide sick pay, free testing and other resources helped boost the market.
“We’re finally getting that a little late to the party, but it’s better to be late to the party then not to come to the party,” said Ryan Detrick, senior market strategist at LPL Financial. He said the stimulus plan should help cushion the financial effects on people and businesses.
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Stocks surged in the early going Friday after Treasury Secretary Steven Mnuchin said on CNBC that the two sides were “very close to getting this done.” But during a late-afternoon White House press conference, Trump said the White House and Congress had yet to agree on a broader aid package. He said he doesn't believe House Democrats are "giving enough."
Speaker Nancy Pelosi said the House would approve its own coronavirus aid package and urged the Trump administration and congressional Republicans to “put families first” by backing the effort to provide Americans with relief.
The market's rout intensified this week amid a torrent of cancellations and shutdowns worldwide. Business closures have fueled fear that a severe pullback in consumer and business spending will tip the U.S. economy into a recession and wreck corporate profits.
Meanwhile, Warren Buffett said Friday that the annual shareholder meeting for Berkshire Hathaway will be streamed live in early May without any attendees, apart from maybe a select number of journalists. The meeting normally draws a crowd to rival professional sporting events.
In just a few weeks, U.S. stocks have wiped out all the gains made during 2019, one of the best years for the market in decades. All the major indexes are in what traders call a bear market.
The Dow suffered its worst session since 1987 on March 12, 2020, plunging 10 percent as emergency measures by central banks failed to douse mounting recession fears due to the coronavirus. (Photo by BRYAN R. SMITH/AFP via Getty Images)
The virus has infected over 137,000 people worldwide. More than 5,000 have died, but half of those who had the virus have already recovered. The pandemic's new epicenter is Europe. In the United States, cases have topped 1,600, while 41 people have died, according to the Centers For Disease Control and Prevention.
Friday's rally was broad, with technology stocks accounting for a big slice of the gains. Shares in cruise line operators, airlines and hotels — among the hardest-hit stocks as people canceled vacations and companies shut down business trips — headed higher.
Investors' anticipation of a government stimulus effort and a rate cut by the Fed next week likely put traders in a buying mood, though it's not unusual for stocks to rebound a day after a big decline, something Wall Street calls a “dead cat bounce."
“I don't know if I would call this a dead cat bounce, but I would certainly not call it a trend,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “Maybe it reflects a little more optimism that we're getting a fiscal impulse that will help support the economy, and by extension, the market while we get through this transitory period of economic weakness.”
On Thursday, the Federal Reserve unveiled a massive short-term lending program to try to help smooth trading in U.S. Treasurys. Many economists expect the Fed will move to cut interest rates by a full percentage point, to nearly zero, at its meeting of policymakers next Wednesday.
This week's historic sell-off helped to wipe out most of the big gains since President Trump took office in 2017. After hitting an all-time high on Feb. 19, the S&P 500 fell more than 20%, officially ending Wall Street's unprecedented bull-market run of nearly 11 years. The slide into a bear market has been the fastest since World War II.
The selling has been so swift and sharp that there remains the potential for a significant bounce after the virus and its impact begin to recede, Detrick said. The economy was already on solid footing and well-known companies like Disney and Apple were could help lead a recovery.
He also said there could be a recession on the horizon, but it would likely be mild at this point. "It could be a shallow, quick, violent, scary recession, but one that bounces back quickly," Detrick said.
For most people the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illnesses, including pneumonia. The vast majority of people recover from the virus in a few weeks.
For now, investors must wait for more information.
"What markets are trying to do is understand what the cycle of the virus is, and then the human reaction to it," said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta.