Dow rallies 900 points, looking to snap 7-day losing streak

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As China reels from the coronavirus outbreak and works to get back online, fast food chains are exploring a "new normal." From contactless delivery to extreme sanitizing, stores are making efforts to stop the spread of the virus while staying open. CNN's David Culver reports.

Posted: Mar 2, 2020 9:56 AM
Updated: Mar 2, 2020 4:30 PM

US stocks were higher on Monday, paring last week's coronavirus-linked losses.

Stocks are coming off their worst week since the 2008 financial crisis. The Dow last week dropped 12.4%, while the S&P 500 plunged 11.5%.

The Dow also recorded its worst one-day point drop in history on Thursday.

'If [the market is] priced to perfection and then something indicates that the perfection is a pipe dream, prices will come off,' said Brad Cornell, emeritus professor of finance at UCLA, of last week's selloff. Prices are much more reasonable now, he added.

But Monday's rebound was strong. After a sharply higher open and some flipping between gains and losses mid-morning, stocks moved solidly higher.

The Dow was up 960 points, or 3.8%, on track for its second-best one-day point gain in history. On a percentage basis, Monday stands to be its best day since December 2018.

The S&P climbed 3.2%, which could its best performance since January last year.

Both indexes are looking to snap a seven-day losing streak.

The Nasdaq Composite was up 3%.

All three indexes entered a correction last week.

Investors are pushed and pulled into different directions by headlines about the novel coronavirus outbreak. On the one hand, the Organization for Economic Cooperation and Development warned Monday that the outbreak could significantly slow down global growth.

Meanwhile, hopes for stimulus action from the world's central banks are keeping investors from throwing in the towel. The Bank of Japan said it would provide 'ample liquidity' to keep financial markets stable and the Bank of England also pledged to do what's necessary for the British economy's stability.

The Federal Reserve next meets on March 18 and market expectations for a half-percentage point interest rate cut are at 100%, according to the CME's FedWatch Tool.

That said, Fed officials have been speaking out against immediate rate cuts and Fed Chairman Jerome Powell said last week that 'the fundamentals of the US economy remain strong.'

Although a Fed rate cut could revive investor sentiment -- at least in the short-term -- market participants are skeptical of how much monetary policy can really do against a global disease outbreak.

'I'd prefer a vaccine over a rate cut,' wrote Seema Shah, chief strategist at Principal Global Investors, in a blog post.

Commodities broadly rebounded from last week's selloffs. Gold futures settled up 1.8% at $1,592.30 an ounce, while US oil prices ended 4.4% higher at $46.75 per barrel.

US Treasury yields, meanwhile, continue to trend lower. Treasuries are a common safe haven investment that receives a lot of buying interest during times of trouble. Bond prices and yields move opposite to each other. The 10-year yield dropped to a all-time low just above 1%.

America's battered manufacturing sector grew in February, according to the Institute of Supply Management. It was the second positive month in a row for the sector, which had fallen into a recession in the second half of 2019 on the back of the US-China trade war.

However, the ISM report also highlighted the potential impact the coronavirus outbreak could have on US manufacturing. Imports have contracted and survey respondents voiced their concerns about demand and supply chain issues.

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