MANHATTAN (CN) — Markets again opened to sizeable gains following Monday’s buying spree, even as the coronavirus continues to ravage the world.
Continuing a buying spree by investors, the Dow Jones Industrial Average gaining nearly 900 points at the morning bell Tuesday after futures rose sharply. The S&P 500 and Nasdaq followed closely behind, building on the massive gains from Monday’s trading.
Some say investors have likely “baked in” the possibility of a recession and are now betting — or hoping — the number of coronavirus cases have reached their peak.
“I think that the emotional panic selling has ended,” said Peter Ricchiuti, a finance professor at Tulane University. “We’re now in the next phase where investors are picking over the slag heap for unfairly punished companies that should sell at higher prices.”
Markets abroad also rallied Tuesday, with hopes that coronavirus-deaths will continue to drop.
The United Kingdom’s Financial Times Stock Exchange, seemingly unalarmed by news that Prime Minister Boris Johnson was moved to intensive care, rose nearly 2.7% by 8:30 a.m. EST.
In Germany, where government officials will soon require citizens to wear masks in public and limit their public gatherings, the DAX increased about 3.5%.
Markets in Asia closed on a positive note for a second day, with the Nikkei gaining 2 percentage points despite Japan declaring a state of emergency. Markets in Hong Kong, South Korea and Shanghai had similar gains.
China, the starting point for the virus, reported no new deaths on Monday, giving some hope the virus is being contained in that part of the world.
Oil markets gained some ground, too, as investors hope for a truce between Saudi Arabia and Russia and their oil-price war since. Prices per barrel of Brent crude — which is culled from 15 oil fields in the North Sea — sat at about $33, while the U.S. West Texas Intermediate pegged oil at $27 per barrel.
Oil demand has been extremely low due to social-distancing guidelines around the globe aimed at slowing the spread of coronavirus. More than 90% of the world’s GDP involves countries with at least some social distancing.
The two-day buying spree is good news for Wall Street, but many still doubt Main Street will recover quickly.
Former Fed Chair Janet Yellen has said a quick, or V-shaped, recovery is less likely than a protracted recovery. “I think a V is possible, but I am worried that the outcome could be worse,” Yellen said Monday in an interview on CNBC. “It really depends to my mind on how much damage is done during the time that the economy is shut down in the way it is now.”
A survey released Tuesday by the National Federation of Independent Businesses showed its small optimism index fell by 8.1 points in March, the largest monthly declined in the survey’s 34-year history.
“Small businesses are living through the coronavirus pandemic right now and it’s hard to say what the severity of the disruption will be, but we do know they’re felling the urgency,” William Dunkelberg, NFIB chief economist, said in a statement.
Half of the small businesses surveyed by the association said they can survive for two more months, at most, in the current economic atmosphere. Only 5% reported they expected the economy to improve in the next six months.
As of Tuesday morning, more than 1.3 million people have been confirmed to have Covid-19, and more than 75,000 have died worldwide, according to data compiled by Johns Hopkins University. In the United States, about 368,000 have been infected by the virus, while 11,000 have died.