Stocks surge on pledges to step up virus response

U.S. stocks jumped as President Donald Trump joined other world leaders in seeking to reassure investors that they'll step up efforts to protect the economy from the coronavirus fallout.

The S&P 500 rose more than 9%, providing some respite after stocks' worst day since 1987, as Trump declared a national emergency to help combat the virus, moved to prop up energy prices and said the private sector will help with efforts to expand testing. That added to optimism after the Federal Reserve said it was buying $37 billion of bonds across maturities.

Oil soared as Trump said the U.S. will step up purchases for strategic reserves. The dollar surged along with Treasury yields and stress in the credit markets showed signs of easing. Precious metals fell, with silver down almost 9% and palladium posting its worst week on record.

The S&P 500's gain Friday was its biggest since 2008, even as the gauge lost 11% this week.

After days of no or inadequate action, policy prescriptions came fast Friday. As Trump announced his plans, Congress was also working on a relief bill. The European Union prepared to suspend government spending rules, and regulators in Italy and Spain banned short-selling on some stocks. China's central bank said it would pump in $79 billion to bolster the economy.

Other markets remained exceptionally volatile. The yen tumbled. Ten-year Treasuries swung from gains to losses. Sovereign bonds sank across most of Europe for a second day amid criticism of European Central Bank measures to address the pandemic. The dollar headed for its best week since 2016.

"It's possible we're just recovering a portion of yesterday's losses on the idea that there were no terrible headlines this morning," said Christopher Jacobsen, a strategist at Susquehanna Financial Group. "The market had priced in the extreme dour outcome and the lack of newsflow this morning to confirm that worst-case scenario resulted in just a bit of a relief rally."

Even with Friday's gains, global equities posted their worst week since 2008 as investors price in a severely weaker economic outlook. Cases are continuing to grow across the world and restrictions on people and businesses are weighing on sentiment. The Bank of Japan on Friday followed an earlier move from the Federal Reserve to inject liquidity.

"It seems that the more severe things become in the short term, the more extreme will be the fiscal and monetary policy response," Mark Dowding, chief investment officer at BlueBay Asset Management, wrote to investors. "It is very conceivable that the full boost from such measures will only really kick in just as activity rebounds, with pent up demand leading to a turbo-charged recovery in the second half of the year in the wake of an economic contraction in the context of the first half."

These are the main moves in markets:

Stocks

The S&P 500 Index climbed 9.2% at the close of trading in New York.

The Stoxx Europe 600 Index added 1.4%.

The MSCI Asia Pacific Index dipped 2.5%.

The MSCI All-Country World Index rose 5.3%.

Currencies

The Bloomberg Dollar Spot Index increased 1.2%.

The euro decreased 1% to $1.1073.

The Japanese yen weakened 3.5% to 108.42 per dollar.

Bonds

The yield on 10-year Treasuries rose 16 basis points to 0.97%.

Germany's 10-year yield jumped 20 basis points to -0.55%.

Commodities

West Texas Intermediate crude rose 7.5% to $33.86 a barrel.

Gold fell 3.9% to $1,514.30 an ounce.