By Sanjana Shivdas and Medha Singh
(Reuters) – Wall Street rebounded on Tuesday as investors pinned their hopes on policy easing by major central banks after global markets plummeted in the previous session on fears of a coronavirus-driven recession.
Traders now expect the Federal Reserve to cut interest rates for a second time this month, with President Donald Trump adding pressure to bring U.S. rates down to the level of “competitor nations”.
After strong gains at the open, all three indexes briefly traded in the red, as investors weighed the effectiveness of additional monetary stimulus to combat the virus outbreak.
However, the indexes quickly reversed course to trade higher again as a report said the Trump administration had discussed a 90-day payroll tax suspension.
“The primary action of a payroll tax cut will be to improve investor confidence in the short term,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.
“As long as people are able to hang on to their jobs, the payroll tax cuts will be quite supportive.”
Traders are also keeping an eye on Trump’s news conference for further hints on stimulus measures to contain the outbreak, which has now infected more than 114,300 people globally and led to over 4,000 deaths.
A top U.S. public health official warned that the virus spread would likely get worse and advised citizens to assess their travel plans. At 12:36 p.m. ET, the Dow Jones Industrial Average () was up 61.56 points, or 0.26%, at 23,912.58, and the S&P 500 () was up 14.19 points, or 0.52%, at 2,760.75. The Nasdaq Composite () was up 80.02 points, or 1.01%, at 8,030.70.
The utilities () and consumer staples () — commonly considered bond proxies — were among the biggest decliners, after showing resilience in Monday’s rout.
Rate-sensitive financial () stocks firmed 1.2% as U.S. Treasury yields bounced off record lows.
Underlining the volatility in the market, declining issues outnumbered advancers for a 1.14-to-1 ratio on the NYSE and for a 1.13-to-1 ratio on the Nasdaq.
The CBOE Volatility index (), a gauge of investor anxiety, slipped about 2.3 points to 52.20, after closing at its highest since the financial crisis.
The S&P index recorded three new 52-week highs and 96 new lows, while the Nasdaq recorded four new highs and 490 new lows.
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