US Market surges on $2 trillion coronavirus rescue package hopes

The US equity market finished session sharp higher on Tuesday, 24 March 2020, as investors chased for recently beaten down stocks on signs that lawmakers were nearing a deal on a giant stimulus package to ease the economic fallout from the coronavirus pandemic. At closing bell, the Dow Jones Industrial Average rose 2,112.98 points, or 11.36%, to 20,704.91, the S&P 500 index advanced 209.93 points, 9.38%, to 2,447.33, and the Nasdaq Composite index gained 557.18 points, or 8.12%, to 7,417.86. For the year to date though, the Dow is down 27.45%, the S&P 500 has lost 24.25%, and the technology-heavy Nasdaq is 17.33% lower.

U.S. lawmakers inched toward an agreement on a roughly $2 trillion coronavirus rescue package, after lawmakers on Monday twice failed to reach an agreement. Senate Minority Leader Chuck Schumer said from the Senate floor that he had very good discussions with U.S. Treasury Secretary Steven Mnuchin, and just before noon claimed that an agreement was on the two-yard line.

The massive stimulus is designed to be a lifeline to Americans and their employers until the coronavirus is brought under control and the country finds some semblance of normalcy. The Federal Reserve signaled the gravity of the situation Monday when, in an unprecedented move, it said it would spend whatever it takes to preserve the U.S. financial system.

Markets across the globe, including those of Spain, the U.K., and Italy, have been reeling from planned, temporary business shutdowns, to mitigate the spread of COVID-19, the infectious disease that is derived from a novel strain of coronavirus, and which has infected 390,000 people globally since it was first identified in December.

The intentional lockdowns are expected to drive much of the world, including the U.S., into a recession. Meanwhile, reports that the outbreak was peaking in Europe also offered some glimmers of hope for market bulls. Indeed, both new cases and deaths have dropped for two days in Italy, and the head of Germany's public health institute said the infections rate in Europe's largest economy was leveling off.

Indian Prime Minister Narendra Modi said a 21-day shutdown would begin at midnight local time, extending restrictions to a nation of 1.4 billion people. Late Monday, British Prime Minister Boris Johnson ordered that all citizens stay home and that all nonessential businesses close. Johnson said police would be called in to enforce social distancing if need be. The International Olympic Committee and Japanese officials officially postponed the Tokyo Games until next year

All 11 S&P sectors were positive, led by a beaten-down energy sector that had lost half of its value this year due to a collapse in oil prices. Energy posted a nearly 16% gain, led by oil giants such as Chevron.

Boeing, Home Depot, American Express, JP Morgan and Walt Disney which have been savaged by the coronavirus restrictions had big days on the Dow as optimism over the stimulus took hold. American Airlines led the airline sector with a 35% jump. The airline industry is anticipating a massive aid package from the legislation.

In economic data, IHS Markit's U.S. Purchasing Manager's Index for the manufacturing sector slipped to 49.2 in March from 50.7 in February, while the service sector index sank to 39.1 from 49.9, the lowest level recorded since data became available in October 2009. Any reading below 50 indicates contraction.

New residential home sales for February fell 4.4% to a annual rate of 765,000 from January's revised level of 800,000.

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