Stock Market Attempts To Rebound From Historic Plunge, As Trump Promises Financial Stimulus

Topline: The stock market looks set to bounce back somewhat early on Tuesday, following its worst day since the financial crisis, as hopes for potential financial stimulus measures to address the economic downturn from the coronavirus outbreak helped ease recession fears.

• Following Monday’s stock market bloodbath, Wall Street pointed to a higher open on Tuesday morning as President Trump promised major steps and financial stimulus measures to combat the fast-spreading coronavirus. 
• Futures for the Dow Jones Industrial Average and S&P 500 were up by around 3.2%, while the Nasdaq looked set to open 3.4% higher, after Trump on Monday proposed the idea of a payroll tax cut, among other potential policy actions, to offset losses from the coronavirus. 
• S&P 500 and Dow futures were up by more than 4% earlier in the session, but pared back gains on the news that the Trump administration is far from ready to roll out any specific economic proposals in response to the outbreak.
• Oil also rose 8%, gaining back some of its losses after Monday’s market rout saw the biggest one-day decline in prices since the Gulf War in 1991, falling almost 25% amid a price war between Russia and Saudi Arabia.
• The market suffered a historical sell-off on Monday, with the Dow and S&P 500 both plunging almost 8% for their worst day since 2008—and steep losses even triggered the market’s circuit breaker mechanism, which kicks in to prevent stocks from free-falling too quickly.
• The closely-watched 10-year Treasury yield, an important economic indicator, hit an all-time low of 0.318% yesterday, before rebounding back to 0.6% on Tuesday despite remaining an area of concern for investors as it is still below 1%.

Crucial statistics: As of Tuesday, the coronavirus has now spread to almost 100 different countries, infecting more than 114,500 people worldwide and killing at least 4,000, according to data compiled by Johns Hopkins University. The public health crisis has now started to hit the U.S., which is grappling with a sharp rise in the number of reported domestic cases: At least 755 are infected and 26 dead. That’s taken a big toll on the U.S. stock market and economy in recent weeks: Investor anxiety has been growing since at least February, when fears over the coronavirus and its impact on the global economy began to peak. 

Key background: Stocks have also been hard hit by an oil price war. The world’s largest oil exporter, Saudi Arabia, slashed prices to the lowest levels in 30 years after Russia refused to agree to OPEC (the Organization of the Petroleum Exporting Countries) production cuts. Following the 14 members of OPEC meeting last week to discuss how to address lagging demand due to the coronavirus, negotiations fell apart, sparking a steep decline in global oil prices and additionally stoking fears of a global recession. While Russia has so far held firm on not reducing its production output, Saudi Arabia’s state-owned oil company, Aramco, said it would offer major discounts and boost its own production to more than 10 million barrels a day in response.

Tangent: Oil companies also bounced back on Tuesday, with stocks like Occidental Petroleum and Marathon Oil jumping by 29% and 37%, respectively.