Wall Street close: DJIA marks its best point gain in history

• The DJIA added 1,293 points, or 5.1%, to close at 26,703,
• The S&P 500 index closed 4.6% higher at 3,089.
• Nasdaq Composite Index ended higher by 4.5% at 8,952.

The DJIA added 1,293 points, or 5.1%, to close at 26,703, a stunning move in what was marking its best point gain in history and its best percentage gain since March 23, 2009. As for the S&P 500 index, it closed 4.6% higher at 3,089, while the Nasdaq Composite Index ended higher by 4.5% at 8,952.

US benchmarks corrected a portion of last week's drop with an extra push into the close, although it is unclear if investors are genuinely taking on risk again or if shorts are squaring positions as the sentiment for central bank easing acts as a temporary circuit breaker. The latter is more than likely when considering the continued drop in US yields (US yield curve bull steepened, with 2-year down 9bps and 10-year down 6bps) and the move back into gold. 

Many had been expecting a correction, of the sort, but the magnitude of the moves today were impressive, especially in the Dow Jones Industrial Average. The DJIA added 1,293 points, or 5.1%, to close at 26,703, a stunning move in what was marking its best point gain in history and its best percentage gain since March 23, 2009. As for the S&P 500 index, it closed 4.6% higher at 3,089, while the Nasdaq Composite Index ended higher by 4.5% at 8,952.

Economic data and central banks in focus

As for US data, it will not be until next month that markets will rally get a good understanding of what the immediate impact of the coronavirus will be, as it paralyses China and spreads around the world, taking both a human economic toll. Banks are lowering their forecast for Chinese growth and we heard from the Fed who are monitoring for the meantime – 4/10ths of a per cent of US first-quarter growth is being widely estimated by economists. 

The US ISM manufacturing index slipped slightly in February, from 50.9 in January to 50.1. "The main concern of weakness in the report came from supplier delivery times which slowed owing to delays in receiving inputs. "Pipeline activity weakened with new orders dropping 2pts to 49.8. Employment also dipped (down 0.6pts to 46.9) and prices paid fell (down 4.9pts to 45.9)," analysts at ANZ Bank explained. 

From here, markets will be staying tuned in for comments from central bankers in the lead into the various interest rate meetings coming up this month, (RBA today) and the G7 finance ministers and central bankers who are holding a teleconference to discuss their policy response to the economic fallout from the coronavirus. Tomorrow’s G7 call is going to be led by Mnuchin and the Fed chair and there’s going to be a communiqué afterwards.

DJIA levels