(Bloomberg) -- U.S. stocks rallied more than 5% as investors rediscovered some appetite for risk with Congress looking close to an unprecedented spending bill to prop up the slumping economy. The dollar halted a 10-day rally.
The S&P 500 rebounded from the lowest level since 2016, poised to notch a third straight Tuesday turnaround after starting the week with a rout. Senators are negotiating the final sticking points in a roughly $2 trillion stimulus bill to help the U.S. economy get through the coronavirus pandemic, and House Speaker Nancy Pelosi said she was hopeful a deal could be reached today. Still, key gauges of U.S. manufacturing and services in March fell the most on record, suggesting the deep toll the pandemic has already taken.
“Any sign of positive news coming out of Washington or the different sides coming together creates a bit of positive sentiment across markets,” said Peter Essele, head of portfolio management for Commonwealth Financial Network.
The Stoxx Europe 600 Index also surged, led by insurers and energy companies, even as data began to show the extent of economic damage to the region from the coronavirus pandemic. Benchmarks across Asia jumped, with Korea’s index soaring almost 9% after the government announced measures to stabilize markets.
The dollar slumped against developed and emerging currencies alike, in a tentative sign of reduced stress after the greenback’s steepest appreciation since the global financial crisis and longest winning streak since 2012. European bonds tracked Treasuries lower.
About $26 trillion has evaporated from equity markets since mid-February, and investors have been left surveying the wreckage and the chances of a lasting rebound. On the one hand, Wall Street has begun to argue that liquidations are nearing an end with real-money investors like pension funds ready to step in, and there are signs of improvement in some of world’s regions that were hardest-hit by the virus. On the other, the number of infections globally continues to accelerate and many of the largest economies are grinding to a halt.
Tuesday’s gain in risk assets follows an unprecedented move by the Federal Reserve to backstop large swaths of the U.S. financial system. Actions on the fiscal side remain pending, with Congress so far unable to agree a compromise spending deal.
“Sentiment has improved, but to call it a turning point is too strong a word for now,” said James McCormick, global head of desk strategy at NatWest Markets. “It is more of a tug-of-war. Policy bazooka is in place, but will be fighting against very weak data and still worrying trends on Covid-19 data. We are more neutral on risk assets now.”
Elsewhere, emerging-market stocks jumped alongside their currencies. Gold extended recent a recent surge and industrial metals rallied.
Here are the moves across major assets:
Stocks
The S&P 500 Index gained 5.7% as of 9:50 a.m. New York time.The Stoxx Europe 600 Index increased 5.6%.The MSCI Asia Pacific Index surged 5%.
Currencies
The Bloomberg Dollar Spot Index sank 1%.The euro increased 0.8% to $1.0817.The British pound climbed 1.9% to $1.1758.The Japanese yen advanced 0.3% to 110.93 per dollar.
Bonds
The yield on 10-year Treasuries increased four basis points to 0.83%.Germany’s 10-year yield advanced three basis points to -0.345%.Britain’s 10-year yield held steady at 0.428%.
Commodities
Gold increased 3.2% to $1,602.27.42 an ounce.West Texas Intermediate crude advanced 1.3% to $23.66 a barrel.
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2020-03-24 13:55:00Z
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