Dow tumbles more than 700 points as fears of second wave grow

Dow tumbles more than 700 points as fears of second wave grow

Dow tumbles more than 700 points as fears of second wave grow

The Fed said it "will begin buying a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers".

Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in NY, said investors had responded to the Fed's move.

Trillions of dollars in fiscal and monetary stimulus along with easing of restrictions had lifted the S&P 500 as much as 47.5% from the pandemic low in March and helped the tech-heavy Nasdaq confirm a bull market last week. The turnaround for the S&P 500 and the Dow represented their biggest intraday comeback since March 19, according to Dow Jones Market Data, while it was the biggest turnaround for the Nasdaq since May 27.

"The banks probably have a bunch of corporate debt on their balance sheets and now there's a buyer for it", Pavlik added.

The Dow Jones Industrial Average was up 237 points, or almost 1%, and the broader S&P 500 index rose 1.1%.

"Someone's going to be buying those bonds because the Fed is telling them it's OK".

Markets have been jittery in recent days as more states have seen an uptick in coronavirus cases.

USA stock indexes fell Monday as dozens of new cases were discovered in Beijing, prompting renewed lockdown measures.

The Federal Reserve announced Monday that it would broaden its purchase of corporate bonds under an emergency lending program created to stimulate the economy.

Moderna jumped 7.4 per cent following a report Israel is in talks to purchase a coronavirus vaccine the company is developing.

"The selloff since last week's high is a reminder that we are not out of the woods yet".

Advancing issues outnumbered declining ones on the NYSE by a 1.97-to-1 ratio; on Nasdaq, a 2.69-to-1 ratio favoured advancers. All of the S&P sectors were higher, with banks leading the charge.

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