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Dow Jones, S&P 500 climb 2% as Fed, other policymakers take further steps

The Federal Reserve opened swap lines with central banks in nine new countries to ensure the world's dollar-dependent financial system continued to function

Reuters  |  New York 

US stocks fall as tech selloff spreads; Dow on track to end year in the red
The benchmark S&P 500 was down more than 3% earlier in the session | File photo

The was up more than 2% in afternoon trading on Thursday after policymakers around the world took further emergency actions to try to help financial and stave off a deep and lasting coronavirus-driven recession.

The Federal Reserve opened swap lines with central banks in nine new countries to ensure the world's dollar-dependent financial system continued to function.

It was the latest in a host of steps taken by the U.S. central bank over the last two weeks, including cutting borrowing costs to near zero and providing billions more for cheap credit.

The pledged late Wednesday to buy 750 billion euros ($820 billion) in sovereign debt through 2020.

President Donald Trump, in another now-regular update for Americans hunkered down in their homes, said there were therapies that he believed could be rolled out quickly to treat COVID-19, the disease caused by the coronavirus, and sounded upbeat on the chances of agreeing hundreds of billions of dollars of aid with Congress.

Policymakers will need to keep providing support in order to provide liquidity to the financial system, said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

"It is not just about the Fed," Krosby said. "It is about the fiscal side of the equation. The question for the market is, how much do we actually need, and the severity of the crisis is suggesting we're going to need amounts we never initially thought of."

The recent sharp market volatility continued, however. The benchmark was down more than 3% earlier in the session.

And Thursday's gains did little to restore the after the pounding the main U.S. indexes have suffered in the past month. The Dow erased virtually the last of its gains under Trump's presidency on Wednesday, while the index has lost roughly $8.7 trillion in market value in the past month.

The Industrial Average rose 442.49 points, or 2.22%, to 20,341.41, the S&P 500 gained 56.45 points, or 2.35%, to 2,454.55 and the Nasdaq Composite added 321.51 points, or 4.6%, to 7,311.35.

"Active investors are using this as an opportunity to maybe pick up what might be perceived as bargains because nobody's really sure how to value stocks right now," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

Ford Motor Co was the latest major U.S. corporation to bolster its cash reserves to ride out the virus impact, drawing down more than $15 billion from existing credit lines.

Official data showed the number of Americans filing for unemployment benefits surged to a 2-1/2-year high last week as companies in the services sector laid off workers because of the pandemic.

Late Wednesday, New York Stock Exchange-owner Intercontinental Exchange Inc said the market would temporarily close its trading floors and move fully to electronic trading starting next week.

Advancing issues outnumbered declining ones on the NYSE by a 2.90-to-1 ratio; on Nasdaq, a 3.84-to-1 ratio favored advancers.

The S&P 500 posted three new 52-week highs and 91 new lows; the Nasdaq Composite recorded 12 new highs and 536 new lows.

First Published: Fri, March 20 2020. 01:06 IST
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