Stock markets continued a strong rally on Tuesday as early signs of a slowdown in coronavirus cases in U.S. hot spots raised hopes that the sweeping lockdown measures were working.

The Toronto Stock Exchange’s benchmark index was up by almost 400 points or almost three per cent in early trading, while the Dow Jones Industrial Average and the S&P 500 in New York were up by about the same amount in percentage terms.

The gains come on the heels of solid gains on Monday after New York and New Jersey showed tentative signs of a “flattening” of the virus outbreak.

“Positive momentum coming out of Monday’s world market rally has continued overnight and into this morning,” said Colin Cieszynski, chief market strategist at SIA Wealth Management in Toronto. “Signs that the growth of coronavirus cases may be peaking in North America and likely has peaked in several European countries has been helping to ease investor fears.”

Louisiana Governor John Bel Edwards said later on Monday new hospital admissions were trending down in his state, also among the hardest hit in the United States, where the nationwide death toll has approached 11,000.

Bear market rally?

“This is looking more like a bear market rally,” said Nancy Perez, senior portfolio manager at Boston Private Wealth in Miami.

“I think there’s still a lot of headwinds that could cause this market to re-test the lows. There will be the initial resumption of business on paper, but then the actual actions will have to follow.”

Despite Monday’s bounce, the S&P 500 remains more than 21 per cent below its mid-February record closing high, and investors fear reports of more production cuts and staff furloughs amid prolonged stay-at-home orders.

A Reuters poll of economists said a global recession would be deeper than previously thought, although most clung to hopes for a swift rebound.

Wall Street’s fear gauge has steadily retreated from 12-year peaks, but volatility is expected to remain high as companies prepare to report an expected slide in first-quarter earnings and outline plans to bolster cash reserves.

Exxon Mobil throttled back a multi-year investment spree in shale, LNG and deep water oil production, saying it would cut planned capital spending this year by 30 per cent as the pandemic saps energy demand.

Oilfield services firm Halliburton Co said it would cut about 350 jobs in Oklahoma and that its executives would reduce their salaries.

Exxon and Halliburton shares jumped 5.4 per cent and 6.3 per cent, respectively, also tracking a surge in oil prices amid hopes the world’s main oil producers would agree to cut output at a meeting on Thursday.

Marathon Oil and Apache Corp rose between five and 13.3 per cent in premarket trading.

Norwegian Cruise Line, Royal Caribbean and Carnival Corp, among the most heavily battered stocks this year due to a near halt in global tourism, rose between 15 per cent and 18 per cent on news that Saudi Arabia took a stake in the latter at its currently reduced price.

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