U.S. stocks snapped back from the three-year lows on Tuesday, ending in the green after U.S. lawmakers said they will come to an agreement on a fiscal package to combat the economic impact of COVID-19.
The Dow Jones Industrial Average (DJI) gained 2,113.01 points or 11.4%, to close at 20,704.91 and the S&P 500 rose209.93 points or 9.4% to close at of 2,447.33. While, the Nasdaq Composite Index closed at 7,417.86, adding 557.19 points or 8.1%. The fear-gauge CBOE Volatility Index (VIX) increased0.1%, to close at 61.67. Advancing issues outnumbered declining ones for a 7.55-to-1 ratio on the NYSE and a 5.04-to-1 ratio on the Nasdaq favored advancers.
How Did the Benchmarks Perform?
Nearly all the sectors of the S&P 500 edged up on Tuesday. In fact, 62 components of the benchmark were up 20% or more Tuesday. Among the most impacted sectors, Hotels, Resorts & Cruise Lines rose 13.9%. Shares of Norwegian Cruise Line Holdings Ltd. NCLH and jumped 42.2%, on Tuesday.
The DOW registered its biggest one-day point gain since 1933. The blue-chip index was boosted by The Boeing Company’s BA 20.9% rise after the company’s Chief Executive Dave Calhoun said its 737 MAX jet is expected to return to service by mid-year.
Overall, the S&P index recorded no new 52-week highs buy fournew lows. Meanwhile, Nasdaq recordedfournew highs and 74 new lows.
Stocks Rebound on Rescue Package Expectation
On Tuesday, Senior Democrats and Republicans said that they were close to a close a deal on $2 trillion stimulus bill. The news injected optimism among investors as the bill is aimed to provide financial aid to people out of work and help the distressed industries.
Additionally, a separate proposal was also presented in the U.S. House of Representatives to grant airlines and contractors a $40 billion bailout. This lifted the S&P 500 airlines index that saw a rise of 19.4%. Shares of American Airlines Group Inc. AAL soared 35.8%. American Airlines carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
On Tuesday, IHS Markit reported that the U.S. Purchasing Manager’s Index for the manufacturing sector slipped to 49.2 in March from 50.7 in February. While the U.S. services purchasing managers index (PMI) declined to a record low of 39.1 for the month, falling from a reading of 49.4 in February. The figures indicate sharp contraction in the U.S. services and manufacturing sectors in March, as the coronavirus pandemic weighed heavily on economic growth and halted business operations.
On the other hand, new home sales for February fell 4.4% to an annual rate of 765,000 from January’s revised level of 800,000. The figures beat the consensus estimate of 751,000.
Stocks that Made Headline
Phillips 66 PSX recently announced plans to reduce capital expenditure by $700 million (around 18%) to $3.1 billion, in order to navigate through the current tough business environment. The stock jumped 8.3% yesterday, following the news. (Read More)
General Motors GM withdraws 2020 guidance citing the uncertainty caused by the coronavirus pandemic. The auto giant intends to drawdown approximately $16 billion from its revolving credit facilities, which would be used to deal with the downturn caused by production shutdowns. (Read More)
The recent weakness in commodity prices prompted energy players to rethink their strategies as well as reconsider capex cuts. Notably, after conforming to the capital discipline during the crude downturn (from mid-2014 to 2016), energy companies resorted to escalating their capital expenditure since 2017. (Read More)
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