Stocks surge most since 2008 on vows for stimulus

U.S. stocks jumped the most since 2008 to cap a wild week of trading as President Donald Trump joined world leaders in pledging to do whatever it takes to protect the economy from the coronavirus fallout.

The S&P 500 surged more than 9%, providing some respite a day after stocks’ worst session since 1987. Equities went on a tear in the last half-hour of trading as Trump declared a national emergency to help combat the virus, moved to prop up energy prices, declared a moratorium of federal student-loan interest and said the private sector will help with efforts to expand testing.

That added to optimism about a robust public policy response after the Federal Reserve said it was buying $37 billion of bonds across maturities.

Oil climbed as Trump said the U.S. will step up purchases for strategic reserves. The dollar posted its best week since 2008. Treasury yields rose and stress in the credit markets showed signs of easing. Precious metals tumbled, with silver down almost 9% and palladium posting its worst week on record.

After days of no or inadequate action, policy prescriptions came fast Friday. As Trump announced his plans, Congress was also working on a relief bill. The European Union prepared to suspend government spending rules, and regulators in Italy and Spain banned short-selling on some stocks. China’s central bank said it would pump in $79 billion to bolster the economy.

Other markets remained exceptionally volatile. The yen tumbled. Sovereign bonds sank across most of Europe for a second day amid criticism of European Central Bank measures to address the pandemic.

“It’s possible we’re just recovering a portion of yesterday’s losses on the idea that there were no terrible headlines this morning,” said Christopher Jacobsen, a strategist at Susquehanna Financial Group. “The market had priced in the extreme dour outcome and the lack of newsflow this morning to confirm that worst-case scenario resulted in just a bit of a relief rally.”

Even with Friday’s gains, global equities posted their worst week since 2008 as investors price in a severely weaker economic outlook. Cases are continuing to grow across the world and restrictions on people and businesses are weighing on sentiment. The Bank of Japan on Friday followed an earlier move from the Federal Reserve to inject liquidity.

“It seems that the more severe things become in the short term, the more extreme will be the fiscal and monetary policy response,” Mark Dowding, chief investment officer at BlueBay Asset Management, wrote to investors. “It is very conceivable that the full boost from such measures will only really kick in just as activity rebounds, with pent up demand leading to a turbo-charged recovery in the second half of the year in the wake of an economic contraction in the context of the first half.”

These are the main moves in markets:

Stocks

• The S&P 500 Index climbed 9.2% at the close of trading in New York.
• The Stoxx Europe 600 Index added 1.4%.
• The MSCI Asia Pacific Index dipped 2.3%.
• The MSCI All-Country World Index rose 5.9%.

Currencies

• The Bloomberg Dollar Spot Index increased 1.1%.
• The euro decreased 0.8% to $1.1097.
• The Japanese yen weakened 3.1% to 108.03 per dollar.

Bonds

• The yield on 10-year Treasuries rose 17 basis points to 0.97%.
• Germany’s 10-year yield jumped 20 basis points to -0.55%.

Commodities

• West Texas Intermediate crude rose 4.3% to $32.88 a barrel.
• Gold fell 3% to $1,529.71 an ounce.