By STAN CHOE and ALEX VEIGA, AP Business Writers
NEW YORK (AP) — A worldwide rally gained steam on Wall Street Monday, propelling major indexes up more than 7%, as traders cheered glimmers of hope that the deadliness of the coronavirus outbreak could be slowing in some of the hardest-hit areas. New York’s governor said the rate of increase of deaths could be approaching a plateau, but he cautioned it was far too early to say the worst had passed. European and Asian markets also rose. Bond yields rose as investors became somewhat less pessimistic about prospects for the economy. The price of oil fell after a meeting between big producers about cutbacks was postponed.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Stocks around the world jumped Monday after some of the areas hardest hit by the coronavirus offered sparks of hope that the worst of the outbreak may be on the horizon.
Gains accelerated throughout the day, and U.S. stocks were up about 5.5% in afternoon trading. Markets in Europe and Asia also rose nearly as much. In another sign that investors are feeling more optimistic about the economy’s path, they sold bonds and the yield on the 10-year Treasury rose toward its first gain in four days.
New coronavirus infections and deaths are showing signs of slowing in Italy and Spain. The center of the U.S. outbreak, New York, also reported the number of daily deaths has been effectively flat for two days. That was enough to launch stocks higher, even though the U.S. is still bracing for a surge of upcoming deaths due to COVID-19 and New York Gov. Andrew Cuomo said restrictions should stay in place to slow its spread.
“We’re running on raw optimism, maybe that’s the best way to put it,” said Randy Frederick, vice president of trading and derivatives at Schwab Center for Financial Research.
Investors have been waiting anxiously for a glimmer of hope that the rate of new infections may hit its peak, which would give some clarity about how long the upcoming recession will last and how deep it will be. Without that, markets have been guessing about how long businesses will remain shut down, companies will lay off workers and flights remain canceled due to measures meant to slow the speed of the outbreak.
“The virus is not everything, it’s the only thing, and nothing else really matters” to the markets, Frederick said, particularly in a week that is relatively light on economic reports.
The S&P 500 was up 5.6%, as of 2:55 p.m. Eastern time. Fewer than 20 stocks in the S&P 500 were down. The index is on pace to more than recover all its losses from the prior week, when the government reported a record number of layoffs sweeping the economy.
The Dow Jones Industrial Average rose 1,215 points, or 5.8%, to 22,267, and the Nasdaq was up 5.6%.
The latest gains are not likely to have much staying power, given how much uncertainty remains about when the pandemic will subside significantly and how much harm will have been inflicted to the economy, said Nela Richardson, investment strategist at Edward Jones.
“It’s not unusual, if you look back historically, within bear markets to have rallies,” Richardson said. “I wouldn’t take the uptick over the last two weeks as a sign of a bottoming or a sign of upside recovery from here on out. There’s still a lot of uncertainty to get through even as we’re hopefully nearing the peak in terms of new coronavirus cases.”
The S&P 500 is still down more than 22% since its record set in February, but the losses have been slowing since Washington promised massive amounts of aid to prop up the economy.
“Since this is a public health crisis, the response has been extreme,” Morgan Stanley strategists wrote in a report. “There are literally no governors on the amount of monetary or fiscal stimulus that will be used in this fight.”
In Japan, the prime minister said Monday that he’s preparing to announce a 108 trillion yen ($1 trillion) package to bolster the world’s third-largest economy. It would be Japan’s largest-ever package for the economy and nearly twice as much as expected.
Japan’s economy was already shrinking late last year before the outbreak forced the global economy into a protective coma induced by health authorities.
The announcement pushed Japan’s Nikkei 225 index to surge 4.2%. Elsewhere in Asia, South Kora’s Kospi jumped 3.9%, and Hong Kong’s Hang Seng rose 2.2%.
In Europe, Germany’s DAX rose 5.8% and France’s CAC 40 jumped 4.6%. The FTSE 100 in London rose 3.1%.
The yield on the 10-year Treasury yield rose to 0.67% from 0.58% late Friday. Yields tend to rise when investors are raising their expectations for economic growth and inflation.
Crude oil fell, giving up some of its huge gains from the prior week when expectations rose that Saudi Arabia and Russia may cut back on some of their production.
Demand for oil has plummeted due to the weakening economy, and any cutback in production would help prop up its price. A meeting between OPEC, Russia and other producers initially planned for Monday, though, was reportedly pushed back to Thursday.
Benchmark U.S. crude fell $2.26, or 8%, to settle as $26.08 a barrel after surging nearly $7 last week. It started the year above $60 per barrel. Brent crude, the international standard, lost $1.06, or 3.1%, to $33.05 a barrel.