The Dow Jones Industrial Average soared more than 1,100 points, or 4.5%, Wednesday as governments and central banks around the globe took more aggressive measures to fight the virus outbreak and its effects on the economy.
The gains more than recouped the market's big losses from a day earlier as Wall Street's wild, virus-fueled swings extend into a third week.
Stocks rose sharply from the get-go, led by big gains for health care stocks after Joe Biden solidified his contender status for the Democratic presidential nomination. Investors see him as a more business-friendly alternative to Bernie Sanders.
The rally's momentum accelerated around midday after House and Senate leadership reached a deal on a bipartisan $8.3 billion bill to battle the coronavirus outbreak. The measure's funds would go toward research into a vaccine, improved tests and drugs to treat infected people.
Investors are also anticipating other central banks will follow up on the Federal Reserve’s surprise move Tuesday to slash interest rates by half a percentage point in hopes of protecting the economy from the economic fallout of a fast-spreading virus.
“The fact that you get an $8 billion bill, that's money that will be spent, hopefully, on something that really will have an impact on mitigating the effects on the economy,” said Tom Martin, senior portfolio manager with Globalt Investments.
Some measures of fear in the market eased. Treasury yields rose but were still near record lows in a sign that the bond market remains concerned about the economic pain possible from the fast-spreading virus. Companies around the world are already saying the virus is sapping away earnings due to supply chain disruptions and weaker sales, with General Electric becoming the latest to warn its investors.
An indicator of fear in the market, which measures how much traders are paying to protect themselves from future swings for the S&P 500, sank 14.1%.
Markets have been on edge for two weeks, with the S&P 500 down 7.6% from its record on Feb. 19, amid worries about how much economic damage the coronavirus will do. The big swings in recent days will likely continue until investors get a sense of what the worst-case scenario really is in the virus outbreak.
The S&P 500 rose 126.75 points, or 4.2%, to 3,130.12. The benchmark index has had five days in the last two weeks where it swung by more than 3%. In all of last year, it had just one.
The Dow gained 1,173.45 points to 27,090.86. The Nasdaq climbed 334 points, or 3.8%, to 9,018.09.