Dow pares losses, moves higher in tumultuous trading
US stocks recovered their early losses Monday in a tumultuous day of trading as growing fears about a second wave of the coronavirus rattled Wall Street until the Federal Reserve announced further plans to support the market.
After tumbling more than 700 points in early trading, the Dow Jones industrial average clawed its way back and was recently up 190 points to 25,795.87. The S&P 500 index dropped as much as 2.4 percent before lifting 0.1 percent, while the Nasdaq posted midday gains of 1.4 percent.
The bounceback came as the Fed announced new plans to buy individual corporate bonds. The Fed has previously said it plans to buy corporate bonds on the primary market, but on Monday expanded that plan to the secondary market.
The helped ease investors’ fears following reports of spikes in COVID-19 infections and hospitalizations in several state, which threatened to put Wall Street on pace to continue last week’s losses.
“The secondary virus outbreak that appears to be dotting the global landscape is frightening the bejeebers out of investors around the world today,” said Stephen Innes, chief global market strategist at AxiCorp.
Nine US states have seen record numbers of new coronavirus cases in recent days and four hit new highs for hospitalizations on Saturday. Dozens of new cases have also emerged since late last week in Beijing, which went almost two months without any reported infections.
The virus fears have taken the steam out of the market’s rapid rally since March, fueled by optimism about the economic recovery from the pandemic, as well as aggressive stimulus efforts from central banks. The tech-heavy Nasdaq composite hit an all-time high last week before a Thursday selloff that marked Wall Street’s worst day since mid-March.
“How deep this correction could run, is entirely dependent on the evolution of primary and secondary COVID-19 outbreaks around the world,” OANDA senior currency analyst Jeffrey Halley said in a commentary.
Wall Street followed international markets lower on Monday. Hong Kong’s Hang Seng index finished down 2.1 percent, while the Nikkei 225 in Japan closed 3.4 percent lower. London’s FTSE 100 was off 1.2 percent as of 10:08 a.m.
With Post wires