US STOCKS-Wall St rebounds from Monday's selloff as Fed boosts liquidity

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* Fed to buy debt directly from companies
* Defensive utilities, consumer staples lead S&P 500
* Indexes up: Dow 5%, S&P 500 5.8%, Nasdaq 5.9%

(Updates to late afternoon)
By Caroline Valetkevitch
NEW YORK, March 17 (Reuters) - U.S. stocks jumped on
Tuesday, a day after their steepest declines since the 1987
crash, as the Federal Reserve took further steps to boost
liquidity as the coronavirus pandemic grips the global economy
and markets.
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 U.S. central bank on Sunday,
including slashing interest rates to near zero.
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.
The Trump administration is pursuing a massive $850 billion
stimulus package to buttress an economy reeling from the health
crisis that has brought major cities in the United States to a
standstill. The pandemic is causing severe business and travel
disruptions across the globe as people stay home and avoid their
usual activities. Many market watchers are now bracing for a
U.S. recession but are unable to see how deep it might be.
"Clearly it all will come down to a sentiment shift. Right
now the predominant concern is that all the shutdowns of just
about everything is going to lead to a recession," said Michael
James, managing director of equity trading at Wedbush Securities
in Los Angeles.
The Dow Jones Industrial Average .DJI rose 1,016.26
points, or 5.03%, to 21,204.78, the S&P 500 .SPX gained 139.41
points, or 5.84%, to 2,525.54 and the Nasdaq Composite .IXIC
added 408.00 points, or 5.91%, to 7,312.59.
So far, many of the measures announced by the policymakers
and the government have not been able to stem the selloff in
stocks.
Monday's drop was the benchmark S&P 500's .SPX
third-biggest daily percentage drop on record, beaten only by
the 1987 rout and the Great Depression crash in 1929 as
investors fretted over a looming recession.
"It's not a monetary policy issue; it's a health issue,"
McMillion said. "But the markets are responding to the impact of
this health issue, and that is where monetary policy can help.
Had the Fed not acted at all, we would see market conditions
much worse than they are."
The head of the U.S. securities regulator on Monday said
that U.S. markets should stay open despite intense volatility,
quashing speculation that the government might shut down the
country's exchanges. All the 11 S&P sectors were trading in the black, led by the
defensive sectors including utilities .SPLRCU and consumer
staples .SPLRCS .
Boeing Co's BA.N shares tumbled to a more-than-six-year
low following a rating downgrade that reflected its worsening
cash flow due to the extended grounding of its 737 MAX jet and
the blow from the coronavirus pandemic. Advancing issues outnumbered declining ones on the NYSE by a
1.48-to-1 ratio; on Nasdaq, a 1.92-to-1 ratio favored advancers.
The S&P 500 posted 7 new 52-week highs and 201 new lows; the
Nasdaq Composite recorded 6 new highs and 817 new lows.