NEW YORK — Shares on Wall Street surged Tuesday, partially rebounding from their sharpest drop in more than a decade, as investors seemed to take comfort from efforts in Washington to protect the economy from damage caused by the coronavirus outbreak.
President Trump met with Senate Republicans Tuesday to pitch them on measures, including a payroll tax cut, to help the economy amid signs of a worsening outbreak in the United States. He is also considering using the Federal Emergency Management Agency as a vehicle for delivering funds to stimulate the economy, a move that would not require approval from Congress.
Though the stock market rebound was at times wobbly, and shares dipped back into negative territory earlier in the day Tuesday, the S&P 500 ended nearly 5 percent higher — recouping more than half of the previous day’s losses — in its biggest one-day gain this year.
“Markets are always enamored with tax cuts, or even the hope thereof. Yesterday’s sell-off was so extreme that it’s not at all surprising to see a bounce,” Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn., said in an e-mail.
Technology shares led the climb as investors rushed to buy the recently beaten down shares of tech behemoth such as Apple and Microsoft, which both rose roughly 7 percent.
Financial stocks also rebounded, reversing some of the damage the sector sustained in recent weeks tied to a sharp decline in yields on government bonds. Government bond yields influence the interest rates that banks charge, and sharp declines in yields can hurt banks’ profitability.
But analysts stressed that any recovery in the markets is likely to be tenuous. The White House had not announced any specific measures, and increased testing for coronavirus is expected to generate rising numbers of new infections in the coming weeks, which could be a new challenge for investors’ nerves. And measures like tax cuts, rebates, or expanded insurance benefits and other spending increases are far from guaranteed.
“Given the nation’s charged politics, especially in the lead-up to the presidential election, these steps could prove difficult if not impossible for lawmakers,” Mark Zandi, chief economist at Moody’s Analytics, wrote in a note to clients.
In Monday’s global plunge, the S&P 500 fell nearly 8 percent, its sharpest daily decline since December 2008 and a tumble so swift that trading in the United States had to be halted for 15 minutes early in the day. In Asia and Europe, some of the biggest financial exchanges flirted with or crossed into bear market territory — a decline of more than 20 percent from their highs. Through Tuesday, the S&P 500 was down about 15 percent.
The price of oil, which had slumped by a quarter on Monday, rose about 8 percent on Tuesday. But oil prices remain down more than 40 percent this year.
Trump took his pitch for a coronavirus-related economic stimulus package to Capitol Hill on Tuesday, joining Senate Republicans over lunch to discuss cutting payroll taxes, offering targeted relief to the tourism and hospitality industries, and possibly taking other steps to lift economic growth.
After the meeting, a Senate aide said Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi of California would take the lead on negotiating a bipartisan package.
Trump emerged from his lunch with no new details to share on the package, which remained in flux throughout the day, amid internal struggles at the White House and a cool reception among congressional Republicans to the idea of a temporary payroll tax cut. Trump said that and other ideas were discussed, adding “there’s great unity within the Republican Party.”
He acknowledged there was no consensus on how to proceed but had confidence the economy will endure. “Be calm,” he said after speaking with lawmakers. “The consumer has never been in a better position than they are now.”
Walmart, the nation’s largest employer, said it was taking steps to ensure its 1.4 million workers would continue to be paid if they contracted the virus or were subject to a quarantine.
The company said employees forced into a mandatory quarantine would receive up to two weeks of pay and their absence would not be counted against their attendance record. Additionally, any US worker with the virus unable to return to work would be paid up to 26 weeks. The policy, announced Tuesday, came as concerns mounted about low-wage workers who risk lost wages if they miss work. Walmart confirmed an employee in Cynthiana, Ky., had tested positive for the virus.
As the epidemic spreads, companies are less worried about factory shutdowns by Chinese suppliers and more about a lack of US customers.
Some have already taken action. Jay Foreman, chief executive of Basic Fun, said the coronavirus crisis had forced him to lay off 18 of the toy company’s 175 workers, 10 of them in the United States.
“China is slowly starting to open up, so we’re getting shipments,” said Foreman. “But now what I‘m worried about is a demand scenario in the United States, where people decide the only thing they’re buying is hand sanitizer and Wet Wipes and Campbell’s Soup.”
The root of Monday’s financial market meltdown was the start of an oil-price war between Saudi Arabia and Russia over the weekend, when the Saudis slashed prices after Russia refused to join the Organization of the Petroleum Exporting Countries in production cuts.
On Tuesday, Saudi Aramco said it would produce 12.3 million barrels a day of crude in April, a jump from its average of 9.7 million barrels a day.
Although it is not clear how much would come from storage, the company is likely to sharply increase production. Saudi officials have said they need to sell more oil to compensate for lower prices, and Aramco is offering deep discounts on its oil to win over buyers.
The sudden upheaval in the oil markets may take months to assess, but the impact on the US economy is bound to be considerable. Many smaller US oil companies could face bankruptcy if the price pressure goes on for more than a few weeks; larger ones will be challenged to protect dividend payments. Thousands of oil workers are about to receive pink slips.
Several airlines announced the temporary suspension of all flights to and from Italy, a day after the country announced a nationwide lockdown. Spain barred Spanish airlines from operating inbound or outbound Italian flights. British Airways announced the suspension of flights until April 4. Alitalia will continue service but gave passengers the option to rebook or reroute, free of charge.
Ed Bastian, Delta Air Lines’ CEO, announced that the airline would cut domestic service by about 15 percent.