Stocks jump with Wall Street seeing 'crazy swings'

The S&P 500 jumped as much as 7% after trading in the red earlier, continuing a streak of volatility last seen during the Great Depression. The Dow Jones Industrial Average notched a 3% gain. Treasuries declined, erasing all of the nearly 25 basis point drop in yields on Monday.

The Trump administration moved to send checks to Americans as soon as in two weeks to stave off the financial effects of an unprecedented upheaval in social interactions that looks set to plunge the world into recession. It also asked Congress for hundreds of billions in aid. The Federal Reserve reintroduced additional crisis-era tools to stabilize financial markets.

"What we're seeing now is the exponential growth in the policy response to the exponential growth in the spread of the virus," said Conor Sen, portfolio manager at New River Investments and contributor to Bloomberg Opinion.

The policy responses came after stresses appeared in the short-term funding and front-edit credit markets.The three-month dollar Libor rate jumped the most since 2008, and similar maturity cross currency basis swaps for euro-dollar, a proxy for how expensive it is to get the greenback, traded at the widest since 2011.

"This is a little bit unlike anything else we've had before because of the unknown length and the unknown implications of it," said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago. We'll "continue to see these crazy swings."

With the coronavirus grinding the global economy toward a standstill and central banks dramatically stepping up efforts to stabilize capital markets and liquidity, The Trump administration asked Congress for $850 billion to combat the virus's effects, a third attempt to juice government spending.

"A bear market does not preclude rallies," said Eleanor Creagh, market strategist at Saxo Capital Markets. "The biggest rallies can be in bear markets -- erratic swings are exacerbated by the present high-volatility regime and strained liquidity conditions. With VIX remaining significantly above the long-term equilibrium, alarm bells are still sounding and traders should be wary of relief rallies."

Data showed U.S. retail sales fell in February, indicating the main driver of the economy, consumer spending, had begun to slow even before outbreak containment measures began. Companies began to scramble for cash, with Kraft Heinz, Caesars and MGM drawing down credit lines.

These are the main moves in major assets:

Stocks

The S&P 500 Index gained 5.99% to 2,528.96 as of 4 p.m. EDT. 

The Dow Jones Industrial Average increased 5.2% to 21,237.

The Nasdaq Composite Index rose 6.2% to 7,334.

The MSCI All-Country World Index climbed 3.6% to 424.45.

Currencies

The euro dipped 1.6% to $1.1008, the weakest in almost three weeks on the biggest dip in 21 months.

The Japanese yen depreciated 1.7% to 107.66 per dollar, the weakest in more than two weeks.

Bonds

The yield on 10-year Treasuries rose 28 basis points to 1%, the highest in almost two weeks.

The yield on 30-year Treasuries gained 32 basis points to 1.60%, the highest in almost two weeks.

Germany's 10-year yield climbed three basis points to -0.43%, reaching the highest in more than three weeks on its sixth straight advance.

Britain's 10-year yield increased 12 basis points to 0.554%, the highest in more than three weeks.

Commodities

West Texas Intermediate crude declined 6.4% to $26.87 a barrel, the lowest on record.

Gold strengthened 1.2% to $1,532.63 an ounce, the first advance in more than a week.