Markets are roaring higher, off their fresh lows yesterday, as the prospect of fiscal stimulus may be helping some investors get more bullish on the market.
As markets approach 1 PM EST, the Dow Jones Industrial Average is having a banner day, up nearly 10% from Monday, having climbed over 1800 points. The S&P 500 has rallied almost 200 points and has rocketed nearly 9%. Meanwhile, the Nasdaq, which had suffered the least in the downdraft is up 500 points or 7%.
Stock Index ETFs are echoing the charge higher, with the SPDR S&P 500 ETF Trust (SPY) up a massive 8.71%. The SPDR Dow Jones Industrial Average ETF (DIA) is up 9.61%, and the Invesco QQQ Trust (QQQ) is up 7.27%.
Senators are optimistic that they will agree on a fiscal stimulus package that will help the economy weather the economic devastation that is resulting from the coronavirus outbreak, which is boosting markets, in addition to bottom-pickers hunting for low priced, beaten down companies.
“From a market perspective … it feels like we’re coming to the end of it,” said Michael Novogratz, CEO of Galaxy Digital, on CNBC’s “Squawk Box.” Novogratz started buying into this market on Monday, he said. “It doesn’t necessarily mean the market’s going to go up, but a lot of that crazy volatility is kind of coming out.”
After two failed attempts to get a stimulus package approved over the weekend and on Monday, markets were in a dark place. The Dow dropped 582.05 points, or 3%, to a new three-year low on Monday and was headed to notch its worst calendar month since 1931. The S&P 500 dropped 2.9% and was more than 30% from a record close set on Feb. 19. But all the devastation has brought some hope of a possible bottom, as volatility has peaked and pulled back some.
“The recent disorderly market action has left scars on most money managers,” said Sean Darby, global equity strategist, in a note. “Bear markets are brutal and they typically presage a recession.” However, Darby pointed out that a number of “risk indicators are peaking with only credit spreads misbehaving,” suggesting a bottom may be nearby.
For more market trends, visit ETF Trends.