By Geoffrey Smith
Investing.com -- U.S. stock markets bounced smartly at the open on Tuesday after suffering their worst day since the 2008 financial crisis on Monday.
The bounce was in part a response to comments by the U.S. administration that it is preparing measures to help businesses cope with any short-term loss of revenue as a result of the coronavirus.
President Donald Trump's economic team is due to meet with Congressional leaders later, and Trump has scheduled a press briefing with the coronavirus task force for 5:30 PM ET. The briefing is expected to flesh out the measures sketched out on Monday.
By 9:35 AM ET (1335 GMT), the Dow Jones Industrial Average was up 848 points, or 3.6% at 24,699 points. The S&P 500 was up 3.8% and the Nasdaq Composite was up 3.6%. All three indices had lost over 7% on Monday.
The Dow futures contract had been up nearly 1,000 points earlier, but trimmed its gains after CNBC cited unnamed White House officials as saying it was unlikely that the administration’s plans could come together by this afternoon.
“It’s not there right now,” CNBC quoted an official as saying. “A lot of details need to be worked out.”
Trump had hinted at a cut in payroll taxes in the comments he made on Monday. Paul Donovan, chief economist with UBS Global Wealth Management, said in a morning note that this would be of limited benefit, given that it would offer no relief to gig economy workers, whose numbers have expanded massively in recent years. Treasury Secretary Steven Mnuchin had said on Monday that the measures would be targeted at small businesses and those most exposed to the economic impact of the virus.
Two of the U.S.’s biggest airlines said they would slash capacity over the summer, reflecting a sharp drop in demand due to the virus. American Airlines (NASDAQ:AAL) stock rose 5.6%, while Delta Air Lines (NYSE:DAL) stock rose 4.8%. In addition to suspending flights, Delta said it would also suspend its buyback program to conserve cash.
The oil and gas sector also enjoyed a sharp bounce, as crude oil prices recovered from their worst day in nearly 30 years on Monday. Occidental Petroleum (NYSE:OXY), seen as particularly vulnerable to low prices after having borrowed heavily to finance its acquisition of Anadarko last year, rose by 15.6% after falling by 52% on Monday.
Marathon Oil (NYSE:MRO) also rose by 25.6% after saying it would cut its 2020 capital spending by over 25% to less than $1.9 billion.