Wall Street rebounded on Tuesday, following its steepest declines since the 1987 crash, as the Federal Reserve took more steps to boost liquidity in a market sapped by business and travel disruptions in the wake of the coronavirus pandemic, Reuters writes.
The benchmark S&P 500 was up 5% after the central bank relaunched a financial crisis-era purchase of short-term corporate debt.
The move to buy back Commercial Paper follows several emergency measures taken by the U.S. central bank on Sunday, including slashing interest rates to near zero, which sent the main indexes tumbling 12% on Monday.
That was the benchmark S&P 500’s third-biggest daily percentage drop on record, beaten only by the 1987 rout and the Great Depression crash in 1929 as investors fretted over a looming recession.
“The question is how deep the recession will be; it all depends on the fiscal stimulus of the governments around the world,” said Elliott Savage, portfolio manager of the YCG Enhanced Fund in Austin, Texas. “Fiscal stimulus and seeing coronavirus start to peak – those are the two things that investors are most focused on because they are going to tell you what the recovery is going to look like.”
The Trump administration is pursuing a massive $850 billion stimulus package to buttress an economy reeling from the health crisis that has brought major cities in the United States to a standstill.