Flurry of Midday Stock Buying Is the Busiest Since December 2018

(Bloomberg) -- Traders are pouring back into battered equity markets, snapping up shares at the fastest pace since December 2018 on optimism that central banks will coordinate to fight the economic threats from the coronavirus.

The S&P 500 Index jumped 2.2% at 1:22 p.m. in New York, rebounding from the worst week since the 2008 global financial crisis. At around noon, almost 1,700 more stocks traded on an uptick than those trading on a downtick on the New York Stock Exchange, a spike in buying seen only twice before in the past three decades.

Stocks are rebounding as major central banks around the world pledged to support the economy as the coronavirus threatens to sap growth. In a rare statement on Friday, Federal Reserve Chairman Jerome Powell opened the door to a rate cut based on the “evolving risks” posed by the outbreak. Central banks in Japan and the U.K. followed suit with supportive messages.

Meanwhile, Group of Seven finance ministers will lead a global teleconference on Tuesday to discuss their response to the threat posed by the coronavirus outbreak, according to people familiar with the matter, who spoke on condition of anonymity.

“I liked hearing Jay Powell say we're on the case and we're watching this. That was a huge statement,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in an interview on Bloomberg TV with Jonathan Ferro. “They have the potential to not make this worse in the short term.”

The spree marks a turnaround from last week, when the NYSE Tick index broke minus 1,300 every day. While the urge to buy may be good news for equity bulls, its record as a signal for the market's trends has been mixed.

A similar buying spree on Dec. 28, 2018, came right near the bottom of a sell-off that took stocks to the brink of a bear market. When the Tick index jumped on Aug. 10, 2011, in the wake of S&P's downgrade of the U.S. credit rating, the market didn't bottom until two months later.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Courtney Dentch at cdentch1@bloomberg.net

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