US stocks rallied Tuesday on news that the Trump administration will seek an additional $1 trillion in economic stimulus for individuals and hard-hit industries to soften the blow caused by the spread of the coronavirus.

Congress has already passed an $8.3 billion stimulus package and is working on a second measure focused on workers. Democrats have proposed their own $750 billion package.

The stimulus packages seek to remove uncertainty and spur economic activity as people isolate themselves, stop spending and hunker down to prevent spreading the coronavirus disease, also called COVID-19. Consumer spending represents about 70 percent of the US economy.

"We'll be looking for support for small- and medium-sized businesses," Treasury Secretary Steven Mnuchin told reporters Tuesday. "We'll be working for support for certain industries that we've talked about and are particularly hit hard. I've talked about airlines, hotels, others. And we will be looking at a general stimulus.

"We're looking at sending checks to Americans immediately. And I mean now — in the next two weeks."

The Trump administration had originally announced an $850 billion stimulus package at a White House briefing Tuesday afternoon, but later on Tuesday, Mnuchin said it had been increased to $1 trillion.

In response, the Dow Jones Industrial Average closed up 1,048.86 points, or 5.20 percent, at 21,237.38. The S&P 500 advanced 143.06 points, or 6 percent, and closed at 2,529.19. The Nasdaq Composite climbed 430.19 points, or 6.23 percent, and closed at 7334.78.

Yield on the 10-year US Treasury bond edged up to just under 1 percent.

But Brent crude and West Texas Intermediate crude oil futures declined. Oil is a proxy for future economic activity. A drop in prices suggests demand will remain low, and traders see no immediate increase in economic activity.

Mnuchin also said the government will postpone the April 15 income tax filing deadline and give taxpayers an additional 90 days to pay 2019's taxes without imposing interest and late penalties.

The US Commerce Department said Tuesday that retail sales in February declined a seasonally adjusted 0.5 percent. Economists had expected sales at stores, restaurants and e-commerce websites to increase 0.1 percent.

Vehicle sales slid 0.9 percent from January. Sales of electronic goods were down 1.4 percent. Grocery store sales slid 0.1 percent. Gasoline station sales declined 2.8 percent, the Commerce Department said.

Economist Alan Blinder said the US is probably in a recession now caused by "fear of shopping" and being in public places where the coronavirus can be spread.

"I wouldn't be surprised if when we look back at the data, it is decided that the recession started in March," Blinder, a former vice- chairman of the Federal Reserve and now a professor at Princeton University, told CNBC.

Trump's stimulus plan is still being developed, and the size of the package could grow. Initial proposals call for the total to include about $50 billion to help airlines, and billions for general stimulus that could include a payroll tax cut.

The Federal Reserve announced plans Tuesday to buy large amounts of commercial paper — short-term unsecured promissory notes issued by companies to cover bills and other short-term expenses — to keep credit flowing.

The Fed took the same action in 2008 after the collapse of the subprime housing market and bought loans worth about $350 billion, or 20 percent of the market.

US stocks rallied from the Dow's plunge of nearly 3,000 points Monday amid fears of extensive and prolonged economic damage caused by the coronavirus.

"Although the contemporary crisis is loaded with bad news, this has not been its primary problem. It's the ‘unknown'," said Jim Paulsen, chief investment strategist at The Leuthold Group, in a research note.

"Not even health experts unders--tand what this is or where it is headed," continued Paulsen, "and that is the worst possible outcome for investors. Give me bad news any day over complete uncertainty."

In a research report, Moody's Investors Service said lodging, cruise ship companies and airlines as well as restaurants are "highly exposed" to an economic downturn caused by the coronavirus.

"Our baseline scenario assumes a normalization of economic activity in the second half of the year," Moody's said. "We caution that as events unfold very rapidly on a daily basis, there is a higher than usual degree of uncertainty around our forecasts and our assessment will evolve over time with new developments."