Stocks rose for the first time in three days on Wednesday as crude prices tried to stabilize after a record plunge.
The Dow Jones Industrial Average jumped 432 points, or 1.9%. The S&P 500 climbed 2% while the Nasdaq Composite advanced 2.3%. (Click here for the latest market news.)
The West Texas Intermediate contract for June was up 21%, trading at $14.02 per barrel, after an earlier decline. Brent futures, meanwhile, were up 9.3% at $21.19 per barrel, recovering from a sharp overnight drop.
Crude seemed to get a jolt after President Donald Trump tweeted he had “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.”
That move higher comes after the May contract, which expired on Tuesday, traded at a negative price for the first time ever. White House economic advisor tried to assuage concerns over declining energy demand, telling CNBC’s “Squawk Box” that prices should rebound once the economy re-opens.
“The short term story in the market remains oil. Yet, this is much bigger than oil,” wrote Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “The price action over the last 48 hours not only points us back to the economy and demand side, but is showing signs of spillover and contagion in risk toward other markets.”
Oil’s historic drop led to a Dow decline of more than 1,000 points, or 5.1%, in two sessions. The S&P 500 and Nasdaq lost more than 4% each to start off the week.
“This week investors are realizing that even though the crisis could soon get better, the negative impacts of having an economy which is essentially shut down are magnifying at an alarming rate. With no demand even for a couple of months, energy prices go negative as excess oil supplies balloon,” Jim Paulsen, chief investment strategist at the Leuthold Group told CNBC.
Helping sentiment on Wednesday, Senate Republicans and Democrats on Tuesday passed a $484 billion coronavirus relief package that focused on small businesses, hospitals, and testing. The House could approve the bill as early as Thursday.
A slew of companies also got a lift from solid earnings results, giving the broader market a boost. Chipotle Mexican Grill posted a better-than-expected profit, sending its stock up more than 7%. Kimberly-Clark and Snap gained 0.6% and 23.6%, respectively, after both companies released their latest quarterly results.
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