MANHATTAN (CN) — In a historic move Monday morning, the Federal Reserve announced an open-ended lending program to help the ravaged U.S. economy.
Before the Fed’s push, early losses abroad and a dismal futures market suggested yet another week that would be marred by negative benchmarks.
The announcement specifies that the Fed will increase its efforts in buying up debt “as necessary” and without any set limit, as well as give municipalities access to various liquidity programs.
“The Federal Reserve will continue to purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions,” the Federal Open Market Committee said in a statement.
Also Monday, the Fed said it would soon open a lending program for small- and medium-sized businesses.
A day earlier, Dow futures had once again fallen to its 5% “limit-down” threshold. After the news, however, stock futures leapt back into the black to about 2% over starting points.
U.S. markets did not open to positive gains after the news, with the Dow Jones Industrial Average and S&P 500 losing about a point in early trading, while the Nasdaq had minor gains.
Investors now anxiously await news on a third stimulus bill.
Work on the bill, which has a price tag of nearly $2 trillion, stalled this weekend after Democrats blocked further debate, slamming the bill for failing to require businesses to provide workers with paid leave and the inclusion of secretive $500 billion bailout for businesses paid at the Treasury secretary’s discretion.
“We’re not here to create a slush fund for Donald Trump and his family, or a slush fund for the Treasury Department of be able to hand out to their friends,” said Senator Elizabeth Warren, D-Mass.
“The bill we’re voting on will affect us for not just in the days to come, but in the months and years to come,” Senate Minority Leader Chuck Schumer said. “We need the best bill possible.”
Senate Majority Leader Mitch McConnell denounced Democrats after the vote, saying lawmakers were “fiddling with the emotions of the American people, fiddling with the markets, fiddling with our health care.”
The White House has asked lawmakers to finish work on the third stimulus by Monday, and Treasury Secretary Steven Mnuchin said a deal was “very close.”
Markets abroad faired poorly. European stocks plunged early Monday, with the Stoxx 600 dropping almost 5% at one point before climbing steadly back up.
In Asia, markets closed on a down note, with India’s two leading markets plunging about 13%. Markets in Singapore fell 7% while those in South Korea and Australia both declined more than 5%.
The one bright spot was Japan’s Nikkei, which rose 2%. That market was closed on Friday due to a holiday.
Covid-19, the new strain of coronavirus responsible for a global pandemic, has now affected more than 343,000 worldwide and 16,000 confirmed throughout the entire United States, according to data compiled by Johns Hopkins University. This weekend, the Senate saw its first confirmed diagnosis with Senator Rand Paul, a Republican who had previously voted against a Covid-testing bill.
Data show nearly 15,000 have died globally from the virus, with now more than 470 deaths in the United States.
Governors in several states have now ordered nonessential employees to stay home and have prohibited any gatherings of more than 10 people.
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