Wall Street surges on hopes of $2 trillion rescue package

(Reuters) – Wall Street snapped back from three-year lows and the Dow jumped more than 1,500 points on Tuesday, as hopes of Washington passing an economic rescue package provided a shot of optimism to markets reeling under the biggest selloff since the financial crisis.

All three main U.S. stock indexes jumped about 6%, swinging back from another brutal selloff in the previous session as the virus outbreak forced entire nations to shut down.

The severity of the spread of COVID-19 and the expectations of aggressive stimulus measures have whipsawed financial markets with the Dow Jones .DJI gaining nearly 2,000 in one session last week, only to fall almost 3,000 points the next day.

The blue-chip index, which has erased over three years of gains in one month, is now on track for its second best day in nearly 12 years.

Investors hope that the U.S. Senate will pass a $2 trillion stimulus bill, aimed at providing financial aid to Americans out of work and help distressed industries, as early as Tuesday.

“They want to see the government throw out all the backstops to help support low income or service oriented consumers,” said Andrew Smith, chief investment officer at Delos Capital Advisors in Dallas, Texas.

A separate proposal in the U.S. House of Representatives to grant airlines and contractors a $40 billion bailout lifted the S&P 1500 airlines index .SPCOMAIR by 17.22%.

Powering the Dow’s gains was Boeing Co (BA.N), which jumped 13.90% after Chief Executive Dave Calhoun said the planemaker expected the 737 MAX jet to return to service by mid-year. Its shares have lost nearly two-thirds of its value so far in 2020.

Traders, however, remained doubtful of a lasting recovery in financial markets without evidence of a peaking in the number of new COVID-19 cases.

“We don’t know how long it’s going to take to peak. We don’t know how to treat it. We don’t have a vaccine. So all of those uncertainties are causing a myriad of aftershocks,” said Nancy Perez, senior portfolio manager at Boston Private Wealth in Miami.

Data on Monday showed U.S. business activity hit a record low in March, bolstering expert views that the economy was already in a recession.

At 13:11 p.m. ET the Dow Jones Industrial Average .DJI was up 1,491.90 points, or 8.02%, at 20,083.83, the S&P 500 .SPX was up 153.38 points, or 6.86%, at 2,390.78 and the Nasdaq Composite .IXIC was up 394.84 points, or 5.76%, at 7,255.52.

Big banks index .SPXBK jumped about 10%, tracking an increase in U.S. government bond yields. [US/]

Advancing issues outnumbered decliners by a 8.87-to-1 ratio on the NYSE and a 5.12-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week high and two new lows, while the Nasdaq recorded four new highs and 61 new lows.