Stock markets surged Tuesday after the government doubled down on its economic response to the coronavirus outbreak, ramping up financial assistance for affected businesses and floating a $1 trillion stimulus package that would include putting cash in the hands of Americans.
The Dow Jones Industrial Average ended the day with a gain of around 1,000 points, bouncing back after its worst day since 1987. The S&P 500 and the Nasdaq rose by around 6 percent each. The benchmark 10-year Treasury yield also rallied, rising back above 1 percent.
The Federal Reserve announced Tuesday that it was launching a program to encourage lending, part of its sweeping emergency measures to address the economic fallout.
"We're going to win," President Donald Trump said in a briefing Tuesday morning at the White House. Trump said the government would provide assistance for small businesses and noted that Treasury Secretary Steven Mnuchin would meet with senators to discuss further stimulus plans, further boosting market confidence.
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A constant slew of updates and shutdowns has sent investors into a tailspin, with traditional safe havens like gold and oil no longer necessarily viable options after a price war between Russia and Saudi Arabia drove the price of crude oil down to 1991 levels.
While analysts, economists and even Trump mention the possibility of a recession, some are now even contemplating whether the massive social and economic upheaval caused by the coronavirus pandemic could throw the U.S. into a depression.
China, where the coronavirus originated, is expected to record economic contraction by 9 percent in the first quarter, Goldman Sachs forecast Tuesday, an unsettling indication of the economic distress that could affect the U.S.
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The Dow plunged below 20,000 in session lows as traders grappled with the unprecedented economic volatility. Trading was again halted in premarket activity Tuesday after the S&P hit its "limit down" threshold. It's the third time in a month that trading has been paused before the opening bell.
