Stocks surged after President Donald Trump and Treasury Secretary Steve Mnuchin announced they're working on a "big" and "bold" legislative package to address the coronavirus crisis. Mnuchin added that the administration is also "looking at sending checks to Americans immediately."

The news, along with a move by the Federal Reserve to ease lending for banks and businesses, lifted stocks on Tuesday after a mixed opening to financial markets. The bounce followed Monday's rout that marked Wall Street's worst day since the epic "Black Monday" crash in 1987.

The Dow jumped 1,049 points, or 5.2%, to end the day at 21,237. Stocks gained sharply after Mr. Trump and Mnuchin made the comments during a White House Coronavirus Task Force briefing Tuesday morning. The S&P 500-stock index and the tech-heavy Nasdaq composite each gained about 6%.

Stocks have mostly plunged during the past three weeks as the pandemic spreads across the U.S. On Monday, the Dow plummeted almost 13%, a bigger percentage loss than any other except for the 22.6% crash on October 19, 1987. The selloff came despite the Fed's emergency action this weekend to cut interest rates to near zero.

Get Breaking News Delivered to Your Inbox

Investors are looking to Congress and the Trump administration for a response to the economic fallout from the coronavirus, with members of both parties expressing a heightened urgency to spend hundreds of billions of dollars to prop up growth. The Senate on Tuesday will consider a relief bill passed in the House last week, and Senate Minority Leader Chuck Schumer has proposed another stimulus package worth $750 billion.

Mnuchin said the aim would be to get checks to Americans in two weeks. The president wouldn't say exactly how much those checks might be — Republican Senators Tom Cotton and Mitt Romney have suggested as much as $1,000 per person.

"We're assuming much greater fiscal action will ameliorate the hit to earnings in due course, but we don't know yet whether Congress will spend, say, 2% of GDP or 10%," Ian Shepherdson, chief economist of Pantheon Economics, wrote in a research note. "We hope for the latter, but given that the very modest first-stage House bill has not yet passed the Senate, it's hard to be wildly optimistic just yet."

President Trump on Monday said in a news conference that the public health crisis could last until "July or August," acknowledging that that the economy could enter a recession.

Asked about the stock market, Mr. Trump said, "The best thing I can do for the stock market is we have to get through this."

Many economists now think the U.S. is likely to enter a recession in the first half of 2020 as consumers slash their spending. Corporate "earnings will crater from the first quarter onwards, but should begin to recover by the end of the year," Shepherdson predicted.