Hope of Congress Action Sends Stocks on Early Morning Surge

MANHATTAN (CN) — The rollercoaster week in stock markets — marked mostly by downs — met Friday morning on a high, with a pending recovery package in Congress appearing to temper coronavirus fears.

On Wednesday night, stock futures on the Dow Jones Industrial Average fell more than 1,100 points to its threshold of 5%, and futures on the S&P 500 and Nasdaq plunged as well, following a speech by President Trump announcing a temporary travel ban to countries in Europe.

Michael Conlon, center, works Thursday with fellow traders on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

Futures markets can be good indicators of where markets will stand once they open, as they represent agreements to sell or purchase stocks or other financial instruments.

On Friday, however, futures trading surged upward to its limits, with 5% increases across the board for the Dow, S&P 500 and Nasdaq. Exchange-traded funds also traded higher.

The markets opened to exuberance among investors, though overall the markets are still down from last week.

In the early minutes of the morning bell Friday, the Dow, S&P 500 and Nasdaq all spiked about 5.5%. The Dow is still far below the 25,000 mark where it opened on Monday but early morning trading hinted at a continuing rally during the day to recoup at least some of the week’s losses.

Markets in Europe also showed signs of promise. As of 8 a.m. Eastern Standard Time, the Stoxx 600 and the DAX index in Germany both were up roughly 6%, while the Financial Times Stock Exchange rose roughly higher than 7%.

Asian markets, however, fared poorly. Circuit breakers designed to halt frantic trading were triggered in the Shanghai and Shenzhen markets when selloffs reached 5%. Trading was temporarily suspended in Manila and Bangkok after losses hit 10%. The Nikkei market, a key indicator for Asian markets, also plummeted, falling 6%.

The economic damage from the coronavirus began in earnest on Monday, when U.S. markets saw their sharpest drop since the 2008 financial crisis, falling 7% in early morning trading that day before a circuit breaker temporarily halted trading. Trading on Thursday was similarly dire and hit another benchmark: the largest drop in the Dow since the 1987 market crash.

Sandwiched in between on Tuesday, the markets gained back some of their losses, with the Dow closing about 600 points higher than when it opened.

The coronavirus, also known as COVID-19, has affected more than 132,000 worldwide, at least 1,700 of whom are in the United States, according to data compiled by Johns Hopkins University. More than 4,700 have died globally from the virus, at least 41 in the United States, data show.

However, some officials claim the numbers are likely higher. A leading health official in Ohio estimates at least 100,000 people in the state already have coronavirus, while the Centers for Disease Control and Prevention estimates 160 million Americans could end up infected over the course of the epidemic.

Legislation to improve testing and other medical responses is closer to completion.

Democrats in the House unveiled a bill that would include free testing for coronavirus and paid emergency sick leave. Republicans balked at the package, however, with President Trump saying it was loaded with “goodies” and Senate Majority Leader Mitch McConnell saying the bill was tantamount to an “ideological wish list.”

Despite misgivings, House Speaker Nancy Pelosi told reporters Thursday evening a legislative package was nearing completion. “It’s fair to say we’re close to an agreement, subject to the exchange of paper,” she said. “We’ve resolved most of our differences and those we haven’t, we’ll continue the conversation because there will be other bills.”

Treasury Secretary Steven Mnuchin echoed that a deal was close. Speaking on CNBC Friday morning, Mnuchin said, “The president is absolutely committed that this will be an entire government effort, that we will be working with the House and Senate.”

Political sniping has not gone away, however. In an early morning tweet Friday, President Trump blamed bureaucracy at the CDC, as well as President Obama, for the current ineffectiveness in dealing with a pandemic.

The response to the H1N1 swine flu was “a full scale disaster, with thousands dying, and nothing meaningful done to fix the testing problem, until now,” Trump wrote. “All Red Tape has been cut, ready to go!!!”

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