US stocks surged Tuesday on signs that Congress is poised to pass a stimulus package worth as much as $2 trillion to offset the economic fallout from the coronavirus pandemic. The Dow Jones industrial average rose as much as 1,528.16 points, or about 7.6 percent, as lawmakers neared a deal with the Trump administration on the rescue …
US stocks surged Tuesday on signs that Congress is poised to pass a stimulus package worth as much as $2 trillion to offset the economic fallout from the coronavirus pandemic.
The Dow Jones industrial average rose as much as 1,528.16 points, or about 7.6 percent, as lawmakers neared a deal with the Trump administration on the rescue package, which would authorize massive cash payments to troubled industrial sectors, from airlines to mom-and-pop restaurants.
The blue-chip index was recently up 1,414.43 points at 20,006.36 after dropping below the 20,000 mark for the first time in three years last week.
The S&P 500 and Nasdaq composite jumped as much as about 6.8 and 6.2 percent, respectively, as the rebound gained steam in the late morning. It came after a Monday selloff spurred by the Senate’s failure to pass a stimulus bill for the second time in two days.
Wall Street has been anxious for a large-scale spending package to complement the Federal Reserve’s aggressive efforts to blunt the economic effects of the pandemic, which has sparked fears about a deep recession.
“My general feeling is that the selling pressure is about to run its course,” said David Bahnsen, chief investment officer at the California-based Bahnsen Group. “I believe a lot of things are shaping up to redirect the trajectory of conversation and sentiment, such as the Fed’s new stimulus measures and expectations of fiscal stimulus.”
The Fed’s Monday move to buy an essentially unlimited amount of Treasury and mortgage-backed securities likely helped stave off a deeper selloff on Wall Street as bitter political gridlock held up the fiscal package.
“Because the fiscal policy response was delayed, that required the Fed to speed up their timetable and put in the ‘whatever it takes’ mantra,” said Andrew Smith, chief investment officer at Delos Capital Advisors.
But more partisan bickering could delay the crucial bill even further — which won’t help investors’ attitudes, according to Ed Moya, senior market analyst at OANDA.
“Lessons from the global financial crisis should remind lawmakers to not drag this out too long,” Moya wrote in a Tuesday commentary.
