U.S. stocks surged on Wednesday, rising on Joe Biden's strong Super Tuesday performance and news that Congress had reached a $98.3 billion funding deal to stem the spread of coronavius.
The Dow climbed more than 1,170 points, or about 4.5%, to 27,090. The S&P 500-stock index gained 4.2% and the tech-heavy Nasdaq composite rose 3.8%.
Health care stocks led the rise, buoyed by the apparent stumble for Senator Bernie Sanders and his signature policy of universal single-payer health care. Former New York City Mayor Mike Bloomberg dropped his bid for the Democratic nomination on Wednesday morning, solidifying Biden's position as the front-runner.
"The race is not yet over, but immediate reaction is likely a relief rally as the tail risk of some of Sanders' policies will be seen as less likely today than last week," analysts at Raymond James wrote in a note.
Stocks rose further Wednesday after the House of Representatives reached a deal on an $8.3 billion package to combat the novel coronavirus outbreak. According to the Associated Press, the deal came together after House Speaker Nancy Pelosi dropped a demand, opposed by the drug industry, to guarantee that any vaccines and treatments developed with government-backed research be offered at "affordable" prices. Instead, the agreement provides $300 million for the government to purchase such drugs at "fair and reasonable" prices to distribute them to those who need it — which is the standard applied in earlier crises like the 2009 H1N1 flu outbreak.
Still, bond yields held near their record lows, suggesting that many investors remain nervous amid continued uncertainty about the economic fallout from the novel coronavirus outbreak. The yield on the 10-year Treasury was slightly below 1% — a record low — as investors seek refuge in safer assets.
A survey released by the Fed on Wednesday noted that some U.S. manufacturers were reporting delayed shipments due to snarled supply chains. The COVID-19 outbreak has led to decreased demand for aircraft from China and other Southeast Asian nations, the report said. Some American solar equipment manufacturers have also experienced delayed shipments due to supply-chain disruptions.
However, the rise of a business-friendly Democrat is likely cheering investors about stocks' long-term outlook.
"The prospect of a Biden-Trump showdown would be a clear positive for the markets, and probably a small plus for the economy too," economists at Capital Economics wrote in a note. "The upshot is that, while markets are rightly focused on the immediate risks posed by the virus outbreak, the election is still ... arguably the bigger medium-term risk to the economy and markets."
—With reporting by the Associated Press.