Wall Street rebounds before another fall after Tuesday bloodbath

Wall Street's bounce ran out of steam on Wednesday (NZT) and the Dow Jones Industrials slipped into negative territory after the indexes opened more than 3 percent higher on hopes of coordinated stimulus globally.

At 11:27 am ET (4:27am NZT), the Dow Jones Industrial Average was down 59.58 points, or 0.25 percent, at 23,791.44, the S&P 500 was up 2.42 points, or 0.09 percent, at 2,748.98. The Nasdaq Composite was up 30.71 points, or 0.39 percent, at 7,981.39.

The three main US stock indexes plunged more than 7 percent on Monday, the 11th anniversary of the market's longest bull run, as oil prices plummeted following pledges by top producers Saudi Arabia and Russia to increase output in an over-supplied market.

The selloff was so sharp it triggered trading halts put in place in the wake of 1987's "Black Monday" crash, with the blue-chip Dow Jones shedding as much as 2,000 points and the indexes slipping toward a bear market.

Sentiment initially recovered on Tuesday on signs of further monetary easing to shore up the economy. Traders now expect the Federal Reserve to cut interest rates for a second time this month, while Japan unveiled a US$4 billion package to combat the coronavirus outbreak.

"Investors are trying to look for any signs that there is light at the end of the tunnel," said Adam Sarhan, chief executive officer of 50 Park Investments in New York.

"If they get any sign that this coronavirus is not as devastating economically, then this market can rip higher."

President Donald Trump gave a news conference on Tuesday, a day after he promised "major" steps to combat the virus outbreak and said he would discuss a payroll tax cut with congressional Republicans.

The CBOE Volatility index, a gauge of investor anxiety, slipped about six points to 48.37, after closing at its highest levels since the financial crisis.

Oil also recouped some losses from its biggest one-day decline since the Gulf War in 1991, supported by expectations for a settlement to the price war and potential US output cuts.

Exxon Mobil Corp and Chevron Corp climbed more than 6 percent in premarket trading, while Occidental Petroleum Corp , Apache Corp and Marathon Oil Corp jumped between 20 percent and 32 percent.

American Airlines rose 4.5 percent, echoing broader market sentiment even as the carrier suspended its full-year results forecast on the virus impact on demand, but said a fall in fuel prices was expected to drive about $3 billion in 2020 cost savings.

Shares of US banks including Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Goldman Sachs, Wells Fargo & Co and Morgan Stanley were up between 4.2 percent and 5.8 percent.

The S&P banks index fell about 14.2 percent on Monday, in its worst day since April 2009, as the yield on the US 10-year Treasury US10YT=RR slid to a record low.

Reuters

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