Stocks rose on Wednesday as the market tried to find some stability after consecutive days of sharp selling.
The Dow Jones Industrial Average traded nearly 400 points higher, or 1.5%. The 30-stock Dow was up more than 400 points earlier in the session. The S&P 500 gained 1.5% while the Nasdaq Composite advanced 1.9%.
Boeing, 3M and Walgreens Boots Alliance led the Dow’s gains, advancing more than 2% each. Tech, industrials, materials and health care outperformed within the S&P 500 as all four sectors rose more than 1%.
The Nasdaq was led higher by a 2.7% gain in Apple shares. Facebook rose more than 1% while Netflix climbed 4.5%. Amazon and Alphabet advanced 1.4% and 1.1%, respectively.
The Dow completed on Tuesday its worst two-day stretch in two years while the S&P 500 had its biggest consecutive-days sell-off in four years.
The 10-year yield rebounded from a record low early Wednesday, perhaps adding some support to the equity market which has been focused on signals coming from the bond market. The 10-year yield was last at 1.36% after falling to 1.31% on Tuesday. The bounce in yields eased concerns slightly that the coronavirus would tip the globe into a recession.
JPMorgan Chase shares were 1.3% higher as yields bounced. Bank of America traded 0.9% higher while Citigroup climbed 0.8%.
Despite the gains, DWS’ David Bianco advises investors to remain cautious.
“Unfortunately, I think this is going to turn into a full-blown correction,” Bianco, chief the firm’s chief investment strategist for the Americas, told CNBC’s “Squawk Box.” “It’s a material impact to our earnings outlook and it’s probably going to be another year of flatish earnings growth.”
The news overnight was not positive in terms of containing the spread of the coronavirus. South Korea reported 169 new cases, bringing the country’s total to 1,146 infected. In Italy, infections now total 325 and cases are now being seen beyond the original epicenter in the north. China reported 406 new confirmed cases, and an additional 52 deaths.
President Donald Trump will hold a news conference at 6 p.m. to address the coronavirus.
“The sensitivity to what we don’t know has really been revealed,” said Jeff Kilburg, CEO of KKM Financial. “These last couple of sessions have really brought out to the surface the potential worst-case scenarios that the virus can spread from continent to continent.”
Stocks plunged for a second day on Tuesday, with the Dow tumbling 879 points, bringing its two-day losses to nearly 1,900 points. The S&P 500 wiped out a whopping $1.7 trillion in just two sessions. The equity benchmark nosedived 6.3% since Monday, suffering its biggest two-day drop since August 2015.
The sell-off accelerated after U.S. health officials warned that the coronavirus is “likely” to continue to spread throughout the U.S. and outlined what schools and businesses should do if the disease becomes an epidemic.
The S&P 500 tech sector entered correction territory Tuesday, falling 10% from its 52-week high, after posting a fresh record close just last Wednesday. Apple through Tuesday was down 12% from its recent high.
The Cboe Volatility Index, known as the market’s “fear gauge,” spiked more than 11% on Tuesday to close at 27.85, the highest close since Dec. 2018. The VIX, a measure of the 30-day implied volatility of U.S. stocks, crossed 30 at its session high on Tuesday as coronavirus fears rattled the markets.
On Wednesday, the VIX traded down 2.25 points,or 8%, at 25.65.
“Investors need to be prepared for the risk of a market correction,” Pramod Atluri, a portfolio manager at Capital Group, said in an email. “It should not come as a surprise that heightened global uncertainty – like news about the further spread of coronavirus and its impact on global supply chains – can hurt valuations which in some areas look priced to perfection.”
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