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Wall Street rallies after Trump declares national emergency

Trump declares national emergency for coronavirus

Stocks surged in late trading on Friday, recovering almost all of the ground lost in yesterday's historic rout. Investors boosted shares after President Donald Trump declared a national emergency and said companies including Google and Walmart would help with efforts to fight the spread of the coronavirus

The Dow surged 1,985 points, or 9.4%, to close at 23,186, with much of the gains coming after Mr. Trump held a press conference that began at 3:30 p.m. Eastern time to outline the White House's plans for addressing the outbreak. The S&P 500-stock index and the tech-heavy Nasdaq both gained 9.3%.

Declaring a national emergency will open up about $50 billion in funding to combat the pandemic, which has closed schools and led to canceled sports events and concerts. Investors were also buoyed by Mr. Trump's announcement of a "public-private partnership" approach to containing the virus, with the president announcing that Google has 1,700 engineers working on a website to direct Americans to testing sites. 

News that the White House and Congress were close to announcing an agreement on a package to provide sick pay, free testing and other resources also lifted stocks.

"We're finally getting that a little late to the party, but it's better to be late to the party then not to come to the party," said Ryan Detrick, senior market strategist at LPL Financial. He said the stimulus plan should help cushion the financial effects on people and businesses.

How to stay financially stable amid coronavirus panic

The surge nearly reversed the 10% decline on Thursday, which sent Wall Street into the first "bear" market since the financial crisis more than a decade ago. Before today's trade, both the Dow and S&P 500 had fallen more than 20% below their most recent peak, ending the record-long bull run that started in 2009.

Mr. Trump appeared at the press conference with the CEOs of several large businesses, including Target and Walmart, which will offer parking lot space to set up testing sites. 

Another company that took part in Mr. Trump's announcement was diagnostics company Roche, which has received emergency approval from the Food and Drug Administration to start selling a high-speed coronavirus test. The president also vowed that millions of new testing kits would be available within a week to one month. 

Student debt relief

In a measure designed to ease financial pressure on millions of Americans, Mr. Trump said Friday that he will waive interest on federal student loans. "That's a big thing for a lot of students that are left in the middle right now, many of those schools have been closed," he said.

Investors may be deciding to jump back into the market because stocks are near their cheapest levels since 2016, said Brad McMillan, chief investment officer for Commonwealth Financial Network, in a research note. On top of that, many stocks now have dividend yields that are higher than the 10-year U.S. Treasury, which makes a compelling financial argument for equities, he noted. 

"Bear markets are typically quite short when the economic fundamentals remain solid," McMillan wrote. "If the pandemic is quickly brought under control, a solid economy could drive a quick recovery."

CBS News Special Report: Trading halted after markets plunge in wake of Trump's travel ban

The stock market suffered historic losses this week, including two trading halts triggered by "circuit breakers" that kick in when stocks decline by either 7%, 13% or 20% in a single trading session. The measures were first adopted after the 1987 crash, and until this week hadn't been tripped since 1997.

Despite the disruptions to daily life in the U.S. caused by the coronavirus, some market watchers continue to expect the economy to weather the storm.

"The odds of a recession have been rising day by day. Some economists believe that we're already in one," Raymond James analyst told investors in a report. "Yet a sharp, brief downturn should be followed by a strong rebound. Low interest rates, low gasoline prices and fiscal stimulus may limit (but not prevent) economic weakness, but should support growth on the other side of the coronavirus."

—With reporting by The Associated Press. 

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