U.S. stock indexes rose on Monday, recovering from steep declines amid a spell of bargain hunting, while investors hoped that monetary stimulus from central banks would help tide over the potential economic impact of the coronavirus.
Index heavyweight Apple Inc jumped 6%, recovering from a more than two-month low after Oppenheimer & Co upgraded the stock to “outperform”, while also advising investors to buy into weakness in the stock.
The so-called FAANG stocks, barring Facebook, also rose 1%.
At 11:20 a.m. ET, the Dow Jones Industrial Average was up 559.36 points, or 2.20%, at 25,968.72, the S&P 500 was up 58.98 points, or 2.00%, at 3,013.20. The Nasdaq Composite was up 163.41 points, or 1.91%, at 8,730.78.
Wall Street had marked its biggest weekly decline on Friday since the 2008 financial crisis, sinking into correction territory amid fears of a recession resulting from the epidemic.
“The selloff was so fierce last week that you do have some buy-the-dip investors emerging,” said Brent Schutte, chief investment strategist, Northwestern Mutual Wealth Management Company, adding that trading would be volatile based on how the virus was appearing to impact the economy.
Wall Street’s drop, coupled with data showing Chinese factory activity contracting at its worst pace ever in February, saw investors increasing bets on central bank stimulus to shore up growth.
Investors now expect the Fed to deliver a 50 basis points rate cut <0#FF:> when it meets on March 17-18.
“We continue to believe that stimulus will actually take hold and push the economy higher as the impact of the coronavirus (will) likely dampen over the longer term,” Schutte said.
Private and official surveys showed U.S. manufacturing activity barely expanded last month due to supply issues stemming from the virus outbreak.
Cancer drug developer Forty Seven Inc jumped 61.7% after larger peer Gilead Sciences made a $4.9 billion offer for the firm. Gilead rose 4.1%.
China’s JD.com Inc rose 11.5% after it forecast at least a 10% rise in revenue for the first quarter, after posting better-than-expected quarterly results.
Advancing issues outnumbered decliners by a 2.75-to-1 ratio on the NYSE and by a 1.70-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 17 new lows, while the Nasdaq recorded 13 new highs and 102 new lows.