U.S. stocks are attempting to register two straight days of gains Wednesday after lawmakers reached an agreement on a $2 trillion economic rescue package overnight, aimed at helping dampening the blow from the COVID-19 pandemic that has seized up business activity in much of the country.
How are benchmarks performing?
The Dow Jones Industrial Average
advanced 566 points, or 2.7%, to around 21,271. The S&P 500
rose 15 points, or 0.6%, to 2,462. The Nasdaq Composite
slid 22 points, or 0.3%, to 7,396.
On Tuesday, the Dow rose 2,112.98 points, or 11.37%, to close at 20,704.91, the S&P 500 index advanced 209.93 points, 9.38%, to close at 2,447.33, and the Nasdaq Composite Index gained 557.18 points, or 8.12%, ending trading at 7,417.86.
For the year to date though, the Dow is down more than 25%, the S&P 500 has lost around 23%, and the technology-heavy Nasdaq is down shy of 16%.
What’s driving the market?
Stocks struggled for direction on Wednesday, despite progress on a U.S. fiscal stimulus package, as investors worried about the depth of the coming recession and the rising death toll from the worldwide coronavirus pandemic that has infected 425,000 people and killed nearly 19,000, as of Wednesday morning.
“The earliest timeframe for when you can expect a bounceback is in the fourth-quarter, but that presupposes the [epidemic] curve is on the right side. The problem is we don’t have the health angle perfectly worked out,” said Alicia Levine, chief strategist at BNY Mellon Investment Management, referring to hopes that the pace of the virus’ spread would start to slow.
Levine said there still remained uncertainty around the trajectory of the coronavirus in the U.S., which analysts say is closer to following the path of the worst-hit countries like Italy and Spain instead of Asian economies like South Korea that have successfully limited the spread of the virus.
At the same time, investors were hopeful that policymakers could limit the economic impact from the coronavirus outbreak. Lawmakers reached a deal in principle on a fiscal stimulus package after a marathon session with Senators and officials from President Donald Trump’s administration led by U.S. Treasury Secretary Steven Mnuchin. The Senate is expected to pass the bill at around noon Wednesday, according to reports.
However, passage of the bill into law isn’t without its challenges. House Speaker Nancy Pelosi needs to get the bill passed unanimously by the 435 representatives, which may present a hurdle, according to Politico.
Still, the legislation would inject some $2 trillion into the U.S. economy, including financial said for individuals and families, additional unemployment-insurance, and loans to small and medium-size businesses.
“By any measure this is a huge stimulus package. One thing that it cannot stop is the recession that is coming. But it should hopefully act as a firewall to slow the spread of this crisis through the economy and prevent it from seizing up the financial system,” said James McCann, senior global economist at Aberdeen Standard Investments.
In U.S. economics reports, durable goods orders jumped 1.2% in February, mostly because of big increase in bookings for new autos. Economists polled by MarketWatch had forecast no change.
How are other markets trading?
In bond markets, the yield on the 10-year U.S. Treasury note
was virtually unchanged at 0.81%.
Crude oil rose, with the price of a barrel of West Texas Intermediate crude
were 0.8% at $24.19 a barrel. In precious metals, gold
was off 1.8% at $1,631.60 an ounce, a day after surging 6%.
The Stoxx Europe 600
was up around 1.2%
In Asia overnight, stocks ended sharply higher, with the China CSI 300
rising 2.7%, Hong Kong’s Hang Seng Index
adding 3.8% and Japan’s Nikkei 225
surging 8% after a 7.1% gain the previous session.
The U.S. dollar traded lower on Wednesday, compared with a basket of its major peers. The ICE U.S. dollar index
was down 0.3%.
How are other companies trading?
Occidental Petroleum Corp.
shares rose 1% after the oil company said it would cut its capital expenditure plans for 2020 even further. It also agreed with activist investor Carl Icahn to add three directors designed by him to the company’s board. The oil firm is also cutting salaries for its employees, according to a news report by the Wall Street Journal.
Dick’s Sporting Goods Inc.
suspended buybacks and said it evaluating the viability of its dividend. The retailer also cut salaries of its senior manager including that of its chief executive officer. Shares were up 5.1%