With Congress closing in on an unprecedented spending bill to prop up the slumping economy, U.S. stocks had their best day in almost a dozen years as investors rediscovered their appetite for risk. The dollar halted a 10-day winning streak.

The S&P 500 rebounded from the lowest level since 2016, notching a third straight Tuesday turnaround -- and the biggest one-day gain since October 2008 -- after starting the week with a rout. The Dow Jones Industrial Average rose more than 11 per cent to clock its biggest advance since 1933.

Lawmakers are negotiating the final sticking points in a roughly US$2 trillion stimulus bill to help the U.S. economy get through the coronavirus pandemic, and House Speaker Nancy Pelosi said she was hopeful a deal could be reached today.

“U.S. equities are responding to the possibility of this gargantuan fiscal stimulus package and some certainty in the political situation,” Stephen Dover, head of equities at Franklin Templeton, said in a phone interview.

The Stoxx Europe 600 Index also surged, led by health-care and industrial companies, even as data began to show the extent of economic damage to the region from the coronavirus pandemic. Benchmarks across Asia jumped, with Korea’s index soaring almost 9 per cent after the government announced measures to stabilize markets.

The dollar slumped against developed and emerging currencies alike, in a tentative sign of reduced stress after the greenback’s steepest appreciation since the global financial crisis and longest winning streak since 2012. European bonds tracked Treasuries lower.

About US$26 trillion has evaporated from equity markets since mid-February, and investors have been left sifting the wreckage and weigh the chances of a lasting rebound. On the one hand, Wall Street has begun to argue that liquidations are nearing an end with real-money investors like pension funds ready to step in, and there are signs of improvement in some of world’s regions that were hardest-hit by the virus. On the other, the number of infections globally continues to accelerate and many of the largest economies are grinding to a halt.

Tuesday’s gain in risk assets follows an unprecedented move by the Federal Reserve to backstop large swaths of the financial system. Still, key gauges of U.S. manufacturing and services in March fell the most on record, suggesting the deep toll the pandemic has already taken.

“Sentiment has improved, but to call it a turning point is too strong a word for now,” said James McCormick, global head of desk strategy at NatWest Markets. “It is more of a tug-of-war. Policy bazooka is in place, but will be fighting against very weak data and still worrying trends on Covid-19 data. We are more neutral on risk assets now.”

Elsewhere, emerging-market stocks jumped alongside their currencies. Gold extended recent a recent surge and industrial metals rallied.

Here are the moves across major assets:

Stocks

• The S&P 500 Index gained 9.4 per cent as of 4 p.m. New York time.
• The Stoxx Europe 600 Index increased 8.4 per cent.
• The MSCI Asia Pacific Index surged 4.9 per cent.

Currencies

• The Bloomberg Dollar Spot Index sank 0.7 per cent.
• The euro increased 0.4 per cent to US$1.0772.
• The British pound climbed 1.7 per cent to US$1.1743.
• The Japanese yen slipped 0.3 per cent to 111.51 per dollar.

Bonds

• The yield on 10-year Treasuries increased six basis points to 0.85 per cent.
• Germany’s 10-year yield advanced five basis points to -0.322 per cent.
• Britain’s 10-year yield rose five basis points to 0.479 per cent.

Commodities

• Gold increased 4.6 per cent to US$1,625.32 an ounce.
• West Texas Intermediate crude gained 2.3 per cent to US$23.89 a barrel.