By Noel Randewich
(Reuters) – Wall Street surged on Monday as investors hunted for bargains following reassurances by central banks that they stood ready to counter the economic impact from the coronavirus following last week’s steep sell-off.
Apple (NASDAQ:) bounced back from a two-year low to jump 6.3% and lift the more than any other company.
The S&P 500 was on track for its best one-day gain in over a year. That followed the U.S. stock market’s worst week since the 2008 financial crisis, sinking into correction territory on Thursday due to fears of a recession resulting from the epidemic.
Bank of Japan Governor Haruhiko Kuroda said on Monday that Japan’s central bank would take necessary steps to stabilize financial markets. That followed a similar move by Fed Chair Jerome Powell last Friday.
“We can shrug off an economic downturn, but if it starts to spill into companies’ capacity to pay their debts, then that creates deeper problems. But it seems to me like the central banks are linking arms to find a way to insulate the credit markets from economic uncertainty,” said Jack Ablin, Chief Investment Officer at Cresset Wealth Advisors in Chicago.
Traders see a 100% chance of a 50 basis point rate cut at the Fed’s March meeting, according to CME Group’s FedWatch tool.
At 2:06 p.m. ET, the was up 2.98% at 26,167.45 points, while the S&P 500 surged 2.40% to 3,025.12.
The added 2.3% to 8,764.71.
“The sell-off was so fierce last week that you do have some buy-the-dip investors emerging,” said Schutte, chief investment strategist, Northwestern Mutual Wealth Management Company.
The Institute for Supply Management said domestic manufacturing activity barely expanded last month due to supply issues stemming from the virus outbreak.
“The Fed can cut rates all it wants, that is not going to put a person in a factory producing a product if that person is quarantined,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:) in Austin, Texas.
“I don’t think (monetary policy) solves the problem … This particular one is both supply and demand, it will help but it won’t fix the problem.”
Cancer drug developer Forty Seven Inc jumped 61% after larger peer Gilead Sciences (NASDAQ:) made a $4.9 billion offer for the firm. Gilead rose 6.7%.
Surgical mask maker Alpha Pro Tech Ltd tumbled 23% but remains up 360% year-to-date.
Advancing issues outnumbered declining ones on the NYSE by a 3.12-to-1 ratio; on Nasdaq, a 2.08-to-1 ratio favored advancers.
The S&P 500 posted no new 52-week highs and 17 new lows; the Nasdaq Composite recorded 23 new highs and 121 new lows.
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