NEW YORK • US stocks rebounded from the worst drop since the global financial crisis after President Donald Trump said he would announce "substantial" economic measures yesterday to combat the fallout from the coronavirus.
Mr Trump's economic plan - which he said could include a payroll tax cut and paid sick leave - does not have buy-in from Congress yet, though he is dispatching his top aides to start pitching the measures on Capitol Hill.
He dismayed some officials with an announcement during a Monday press briefing that he would unveil a plan in 24 hours, as they had vied for taking the plan to lawmakers first.
Still, the S&P 500 jumped more than 3 per cent at the opening bell, as investors digested Mr Trump's announcement.
A few minutes into trading, the Dow Jones Industrial Average stood at 24,773.66, up 3.9 per cent, or around 920 points. The index had lost over 2,000 points on Monday.
"A strong rebound today, if it in fact holds, does not mean the volatility, or even the worst, is behind us. Rather, investors should expect continued gyrations both up and down until there is greater certainty on the coronavirus," said Mr Greg McBride, chief financial analyst at Bankrate.com.
US stocks plunged more than 7.5 per cent on Monday - the worst day on Wall Street since the 2008 financial crisis - as a full-blown oil price war rattled investors already on edge over the virus outbreak.
It was, in large part, the market crash that pushed the White House into action on Monday, according to people familiar with the matter.
As outlined by Mr Trump, the proposal will likely include a payroll tax cut and a short-term expansion of paid sick leave, according to those people, who described the plan on condition of anonymity ahead of its planned release yesterday.
The package will leave out for now any aid for the travel industry, which has been battered by travellers curtailing plans since the coronavirus outbreak, according to people familiar with the matter.
While the White House wants to find a way to help airlines and hospitality companies reeling from a plunge in demand from travellers, administration officials remain uncertain about the best way to do so.
A payroll tax cut requires legislation, while paid sick leave may be implemented through executive action, those people said.
Elements of the package could still shift, including the payroll tax changes, which late on Monday drew opposition from Mr Richard Neal, chairman of the tax-writing House Ways and Means Committee, as well as other Democratic congressional leaders.
While Mr Trump has been pointing to the Federal Reserve as the front line, economists have stressed that the virus crisis will require a multifaceted response from governments, healthcare professionals, central bankers and others to stem the human and economic damage.
The measures emerged following a tense meeting on Monday of Mr Trump's top advisers in a bid to contain the widening fallout from the coronavirus and tumbling oil prices.
Until Monday, Mr Trump and his administration were sticking to the message that the US economy was in a strong position to weather the storm, but the dramatic market drop shifted their position, said the people familiar with the matter.
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