U.S. stocks surged to close higher Wednesday, as investors warmed to the Federal Reserve’s surprise interest rate cut and support from other central banks, as well as former Vice President Joe Biden emerging as the frontrunner of the Democratic Party’s presidential race.

Stocks initially slumped in the wake of Tuesday’s emergency rate cut by the Fed as it failed to inspire investor confidence in policy makers’ ability to counter the COVID-19 epidemic, the infectious disease that originated in Wuhan, China late last year.

See:Why stocks tanked despite the Fed’s emergency rate cut

How did major benchmarks fare?

The Dow Jones Industrial Average DJIA, -0.46% advanced 1,173.45 points, or 4.5%, to settle at 27,090.86. The S&P 500 SPX, -0.84% rose 126.75 points, or 4.2%, to end at 3,130.12. The Nasdaq Composite COMP, -1.26% climbed 334 points, or 3.9%, to 9,018.09.

On Tuesday, the Dow finished 785.91 points lower, or 2.9%, to 25,917.41, after being down by as many as 997.04 points. Meanwhile, the S&P 500 fell 86.86 points, or 2.8%, to 3,003.37. The Nasdaq Composite Index retreated 268.07 points, or 3%, to end at 8,684.09.

Wednesday’s rally turned the Nasdaq positive for the year, up 0.5%, while the S&P 500 was down 3.1% and the Dow was 5.1% lower over the same period.

What drove the market?

“What tends to happen with rate cuts, especially with surprise ones, is that sometimes it takes the market a couple of days to come to a conclusion about it,” Chris Konstantinos, RiverFront Investment Group’s chief investment strategist told MarketWatch.

“If you are bullish, this is fantastic,” he said. “The Fed is getting out ahead of any weakness in economic data to restore confidence.”

Analysts also were attributing the gains for stock indexes to former Vice President Joe Biden’s strong showing during the Democratic primary contest on Tuesday night.

Biden’s string of Super Tuesday victories, winning 9 of 14 states including Texas, was seen as blunting the momentum of Bernie Sanders, a candidate that has been characterized by some on Wall Street as antibusiness. Analysts say Sanders’ agenda threatens to upend several industries including health care.

The gains by Biden on Super Tuesday sparked a broad-based rally in health-care stocks Wednesday, sending United Health Group Inc. up more than 10%.

The bounceback in stocks on Wednesday came after the Fed jolted markets with a half-a-percentage-point rate cut on Tuesday, saying that while the economy’s fundamentals remain strong, the “coronavirus poses evolving risks to economic activity.” Investors are now encouraged by other global central banks following suit, with the Bank of Canada also lowering rates by half a percentage point to 1.25%

The International Monetary Fund’s managing director Kristalina Georgieva said it would unleash an $50 billion aid package to help combat a global slump, after earlier noting that she had “seen a shift to a more adverse scenario,” and suggested that global economic growth in 2020 could dip below the 2.9% estimate in 2019, a more than 0.4% drop from the IMF’s previous forecast of 3.3% for this year. This comes a day after the World Bank pledged to deploy $12 billion of funds for countries combating the coronavirus.

See: Global economic growth slowdown from coronavirus will be more significant than previously thought, IMF chief says

On the fiscal front, a bipartisan group of U.S. lawmakers reached a deal to provide a roughly $8 billion emergency funding package to fight the spread of the coronavirus domestically. Also, California now has reported 51 confirmed cases, the most of any state, while Los Angeles declared a local state of emergency.

“Any little bit of good news, or bad news, regarding some mix of politics and viral information, is going to be moving the markets pretty dramatically,” said John Cunnison, chief investment officer at Baker Boyer, in Walla Walla, Washington.

But Cunnison also warned that the coronavirus spread remains a big threat, particularly since the Pacific Northwest and California still appear to be in the early stages of documenting cases. “It’s possible we have numbers in the community that are going to make it difficult to stop without pretty dramatic social distancing,” he said. “The economic costs really come from social distancing measures.”

Read: Dalio said those who insured against coronavirus fallout could be ‘annihilated’

Some good U.S. economic data also improved investor sentiment. Automatic Data Processing Inc. reported private-sector employers added 183,000 jobs in February, coming ahead of the closely watched Labor Department report on nonfarm payrolls, on Friday. Meanwhile, the Institute for Supply Management reported its nonmanufacturing gauge in February rose to 57.3% from 55.5% in the previous month, suggesting that the services sector had yet to feel the blow from the coronavirus.

St. Louis Fed President James Bullard on Wednesday said the Fed’s policy was on point, while appearing to downplay expectations of a subsequent cut when the central bank formally meets on March 17-18. “We got the policy rate to the right place for now, given the information we have now,” he said, in an interview on Bloomberg Television.

But the Fed’s Beige Book showed the first negative impact of the global coronavirus outbreak on the domestic economy.

Which stocks were in focus?

How did other assets perform?

The benchmark U.S. 10-year Treasury note TMUBMUSD10Y, 0.692% was at 0.994%, one day after it made its first foray below 1%. Yields rise as prices fall.

Gold for April delivery US:GCJ20 fell 0.1% to settle at $1,643 an ounce, while US:CLJ20 April crude futures fell 0.9% to finish at $46.78 a barrel on the New York Mercantile Exchange, as traders awaited a key OPEC+ decision on potential crude oil output cuts.

The Cboe Volatility Index VIX, +1.61% was at 33.53, down 9%. The so-called VIX falls as stocks rise and is used as a gauge of implied volatility in the stock market. It’s historic average is around 19.

In Asia overnight, the Shanghai Composite Index SHCOMP, -0.41% gained 0.1% and Tokyo’s Nikkei 225 NIK, -0.66% rose 0.3%. The Kospi 180721, -1.22% in Seoul gained 2.1%.

Hong Kong’s Hang Seng HSI, -1.55% edged down 0.2% while the S&P/ASX 200 XJO, -1.22% in Sydney tumbled 1.7%.

European markets ended higher. The Stoxx Europe 600 index SXXP, -0.50% advanced 1.4%, while the FTSE 100 FTSE, -0.60% added about 1.5%.

Additional reporting by Sunny Oh