New coronavirus infections and deaths are showing signs of slowing in Italy and Spain. The center of the epidemic in the United States, New York, also reported that the number of daily deaths remained stable for two days.
This was enough to launch higher stocks despite the fact that the United States is still preparing for an outbreak of death from COVID-19. New York Governor Andrew Cuomo said the restrictions should stay in place to slow its spread.
The S&P 500 rose 175 points, or 7%, to close at 2,664, while the Dow Jones jumped 1,627 points, or nearly 8%, to 22,680. The tech-rich Nasdaq also gained more than 7%.
“We are operating on gross optimism, that may be the best way to put it,” said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research.
The Federal Reserve also boosted market sentiment by announcing that it would buy loans that banks make to small businesses under the federal government.
By buying the loans, the central would encourage the banks to engage more in the loans. Otherwise, when banks make a loan, they are usually required to hold money in reserve in the event of default.
Investors were eagerly awaiting a glimmer of hope that the rate of new infections could peak, which would provide some clarity on the duration and depth of the next recession.
In the absence of signs of a slowdown, the markets have guessed how long businesses will remain closed, businesses will fire workers and flights will be canceled due to measures to slow the speed of the epidemic.
“The virus is not everything, it is the only thing, and nothing else is really important” to the markets, said Frederick, especially in a week relatively uninformed by economic reports.