- US stocks slid Tuesday as investors continued to weigh new coronavirus developments.
- All three major indexes surged in early trading before paring gains throughout the afternoon and closing in negative territory.
- New COVID-19 cases appear to be decelerating in the US, Spain, and Italy.
- On Monday, China reported no new deaths from the virus for the first time since the outbreak began.
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US stocks slid Tuesday as investors weighed signs that the coronavirus pandemic is slowing in major economies. Sharp early gains were reduced in afternoon trading before all three indexes closed in negative territory.
Recent gains have been driven by an apparent slowdown in coronavirus cases. New cases appear to have fallen from peaks in the US, Italy, and Spain, three countries with severe outbreaks. New York Gov. Andrew Cuomo said Tuesday that hospitalizations were slowing, even though the state reported its highest one-day jump in deaths.
There are also positive signs in Asia: China on Monday reported no new deaths from the virus for the first time, and new cases in South Korea have slowed.
“The world has finally seen a glimpse of light at the end of this dark tunnel,” Hussein Sayed, the chief market strategist at FXTM, told Business Insider.
Here’s where major US indexes stood at the market close at 4 p.m. ET on Tuesday:
Despite finishing the day lower, all three major US indexes jumped into a technical bull market early in Tuesday’s trading session, marking a 20% rally from recent lows.
“I would call that a bear market rally,” Randy Frederick, the vice president of trading and derivatives for Charles Schwab, told Business Insider. “If we rebound so quickly from the bottom and go right back into a sharp upturn, which frankly we’ve almost done, it concerns me that we’re going to have a second downturn.”
US airlines and cruise lines gained. United Airlines edged 2% higher, while American Airlines climbed 8%. Royal Caribbean surged nearly 14%, Norwegian Cruise Line gained more than 10%, and Carnival spiked as much as 27% after Saudi Arabia bought a stake in the company on Monday.
Still, uncertainty remains around the pace of recovery from the coronavirus-led economic slowdown. In March, requests to suspend or reduce mortgage payments increased more than 3,000% as homeowners scrambled for relief, according to a Tuesday report from the Mortgage Brokers Association.
Small-business optimism also plummeted by the most on record in March, according to the National Federation of Independent Business. At the same time, a measure of small-business uncertainty rose to the highest level since 2017.
Treasury Secretary Steven Mnuchin said Tuesday afternoon that he spoke with congressional leaders about adding an additional $250 billion to the small-business-loan program. A vote is planned for Thursday. Last month, Congress approved $350 billion for small businesses as a part of the record $2 trillion Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.
Sayed said he thinks markets are repricing the worst-case scenario because of the virus outbreak and that investors’ moves into risk assets show they believe a “V-shaped” recovery is coming.
“Attractive valuations, ‘fear of missing out,’ and extraordinary stimulus packages also exaggerate the upside moves in prices,” he said. “However, no one yet knows the exact damage this virus has already done to the global economy, corporate earnings, and what kind of exit strategies countries will follow in the weeks ahead.”
It’s also likely that markets will remain choppy as the coronavirus pandemic continues on. Even though the Cboe Volatility Index has fallen from recent highs, it’s still at “panic level,” according to Frederick.
“Remember that when you’re in a period of time like this that you’re going to get big moves up and down,” he said.
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