'A Short-Term Bottom'? Stocks Rise Sharply on Wall Street After 7-Day Beating

The Dow Jones Industrial Average soared nearly 1,300 points Monday as stocks roared back from a seven-day rout on hopes that central banks will take action to shield the global economy from the effects of the coronavirus outbreak.

The huge gains clawed back some of the ground lost in a massive sell-off that gave stocks their worst week since the financial crisis of 2008. 

Technology companies led the broad gains, which gave the Dow its biggest-ever point gain and biggest percentage increase since March 2009. The S&P 500 index jumped 4.6%, its best day since December 2018. 

European benchmarks were mostly higher, and Asian markets rose broadly.  Bond prices fell, pushing yields higher after having touched another record low earlier in the day. The yield on the 10-year Treasury note rose to 1.15% from 1.12% late Friday. 

Stocks Started Climbing Back Monday Morning

As CBN News has reported, the deadly COVID-19 virus has now claimed the lives of more than 3,000 people around the world. In addition, it has also infected US markets, helping to drive stock prices down by 12 percent in one week.

But stocks rallied as trading began on Monday as the Dow Jones Industrial Average surged more than 700 points at one point, while the benchmark S&P 500 climbed 2.7%, placing in on track for its best day since January 2019. 

CBN News Financial Editor Drew Parkhill says after the virus-fueled selloff the Dow may have hit at least a short-term bottom on Friday. 

"The market had already been set up for a correction. It had been going up and up and up.  And normally, you get a correction every so often." Parkhill said during an appearance on Monday morning's edition of CBN's Newswatch. "It's just the market taking a breather."

He says the market had been surging so long without pulling back for a bit.

"This time, it hadn't stopped. It hadn't pulled back and so a lot of people had been waiting for one for weeks," Parkhill explained. "And then this (coronavirus) came along, so it made what was going to be a correction...it accelerated it and drove prices down. This was the fastest 10 percent correction since the 1930s. I haven't researched that myself, but that was what somebody calculated."

"Markets hate uncertainty," he added. "People who are investors, who are putting money to work, they don't like not knowing what's going on. That's the big concern. This is a big uncertainty because we're learning a lot about it. We're finding out more about it and the more we are finding out, the more it seems to be better news, so to speak."

When asked if he thought the worst of the stock market decline was over, Parkhill replied, "It may be. But the Dow Jones Industrials hit about 24,700 for that Friday. That's going to be a very important price level to watch.  People are going to be watching that. As long as we hold above that, the worst may be over for now. We'll see."

"But there's no question the coronavirus was a major, probably the major cause in pushing prices down so far so fast," he continued."

When asked about the chance for a recession, Parkhill said the virus could possibly cause some sort of slowdown.

"The economy is actually weaker than people realize as in terms of a possible recession," he said. "Could it tip us over into one? That remains to be seen, because there's still a lot we don't know. Now I will tell you, and it's very important, the numbers coming out of China – China has been hit a good deal harder than we are. We're probably going to not nearly have the impact that they are. Since it (coronavirus) originated there, some of the early numbers about the economic slowdown and activity there. It's been hit pretty hard so far. Now factories are starting to get back online, so things are starting to improve there at least in some areas."

"But the jury's out," Parkhill said. "I don't know if I would go as far and say it could cause a recession. It could be a drag on the economic road, but that would be about it as far as we know now."

Two new surveys showed a sharp drop in Chinese manufacturing in February as anti-virus controls shut down the world's second-largest economy, but companies are confident activity will revive following government stimulus efforts.

Stocks in travel-related companies have been among the hardest-hit as the outbreak has led to canceled flights and disrupted vacation plans. Cruise operators continued to pile up losses Monday. Royal Caribbean Cruises fell 2.4%, Norwegian Cruise Line dropped 6.8% and Carnival fell 4.1%.