NEW YORK (Reuters) – Wall Street jumped on Monday following an announcement by the U.S. Federal Reserve regarding its corporate bond purchasing program that boosted investor confidence, which had been wavering amid a spike in new COVID-19 cases.

All three major U.S. stock indexes abruptly reversed earlier losses in afternoon trading, following the Fed’s decision to apply an indexing approach to its secondary market corporate credit facility to create a more diversified portfolio.

“It makes sense that we’d rally (following the Fed announcement),” said Oliver Pursche, president and CIO of Bronson Meadows Capital Management in Fairfield, Connecticut. “But the market is probably overshot, considering what the reaction should be.”

“To a large extent it was expected,” Pursche added.

A flood of liquidity in the form of fiscal and economic stimulus, along with uneven but steady re-openings of state and local economies, sparked a remarkable rally in the stock market since its late-March trough.

But surging new cases of COVID-19 in China, where the pandemic originated, prompted the reintroduction of containment measures, and record hospitalizations in several U.S. states dampened investor risk appetite.

On the flipside, an uptick in China’s factory output and a much better-than-expected Empire State manufacturing report gave evidence that the pandemic-hobbled global economy was on the road to recovery.

Earlier, the U.S. Federal Reserve announced it had opened registration for its Main Street Lending program to help businesses weather the storm of mandated lockdowns.

Last week, the Fed provided its first pandemic era outlook, and market participants will be closely following Chair Jerome Powell’s testimony before Congress for details on the central bank’s somber economic projections.

“You’ve gone through an enormous amount of pain and the healing will take some time,” Pursche added. “The patient got very sick and is on the road to recovery but it’s a long road.”

The Dow Jones Industrial Average rose 243.16 points, or 0.95%, to 25,848.7, the S&P 500 gained 35.27 points, or 1.16%, to 3,076.58 and the Nasdaq Composite added 161.76 points, or 1.69%, to 9,750.57.

All 11 major sectors of the S&P 500 were trading higher, with industrials and financials enjoying the largest percentage gains.

Drugmaker Moderna Inc gained 6.0% following a report that Israel is in advanced talks to buy its coronavirus vaccine.

Advancing issues outnumbered declining ones on the NYSE by a 2.01-to-1 ratio; on Nasdaq, a 2.89-to-1 ratio favored advancers.

The S&P 500 posted no new 52-week highs and no new lows; the Nasdaq Composite recorded 36 new highs and 10 new lows.

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