The S&P 500 rose 6 per cent a day after its steepest decline since the 1987 crash, as the US Federal Reserve took further steps to boost liquidity and stem damage from the coronavirus outbreak that has gripped the global economy.

The central bank relaunched a financial crisis-era purchase of short-term corporate debt in the hope that companies are able to continue paying workers and buying supplies through the pandemic.

Tuesday’s move to buy back commercial paper followed several emergency measures taken by the US central bank on Sunday, including slashing interest rates to near zero.

But with the day’s bounce, the market has retraced only part of its recent losses.

The S&P 500, which fell 12 per cent on Monday, is still down roughly 25 per cent from its February 19 record closing high, and many market-watchers see more volatility ahead.

The Dow Jones Industrial Average rose 1,048.86 points, or 5.2 per cent, to 21,237.38, the S&P 500 gained 143.06 points, or 6.00 per cent, to 2,529.19 and the Nasdaq Composite added 430.19 points, or 6.23 per cent, to 7,334.78.

Investors “like that the Fed is willing to step in here and willing to step in big … That’s an important message that they’re sending to market participants,” said Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute in Winston-Salem, North Carolina.