Wall Street, awaiting indications that lawmakers will extend stimulus programs later this summer, opened on Friday to moderate gains.
MANHATTAN (CN) — Markets in the United States and abroad inched forward on Friday, looking to end the week on a positive note.
At the opening bell, the Dow Jones Industrial Average gained 300 points, a 1.2% increase. The S&P 500 and Nasdaq had similar increases.
Asian markets nearly across the board showed mild gains, with India’s Sensex gaining 1.5% at the high end. Singapore’s market dropped 1.1% by the closing bell. By 9 a.m. EST, major markets in Europe all seemed poised to cap off the week up at least 1%, with the pan-European Stoxx 600 just under that mark.
Wall Street now seems to be treading water as it waits for further action from Capitol Hill, as unemployment has leveled off but remains high and several stimulus programs begin to phase out.
Political battle lines are increasingly hardening over the prospect of continuing the $600 weekly plus-up of unemployment benefits during the coronavirus pandemic. Republicans say the extra money incentivizes workers to remain at home and diminishes the chances of a V-shaped recovery. Democrats characterize the extra cash as a lifeline for out-of-work blue-collar workers and say yanking it away after July could lead to a wave of foreclosures.
Small businesses may be looking for additional help soon, too. The Paycheck Protection Program, which was designed to extend interest-free loans to small businesses, will soon run its course for many borrowers. Those loans become grants if certain requirements are met, such as spending most of the money on keeping employees on the payroll.
The PPP has faced criticism since its inception for both the haphazard rollout and the fact that many larger, publicly traded companies were able to jump the line at banks ahead of mom-and-pop stores that had no other liquidity options.
Under the PPP, borrowers could apply for only a single loan, and many of them are starting to report running out of funds. Some lawmakers reportedly are working on legislation to give smaller borrowers a second bite at the PPP apple.
Other concerns have cropped up, too, including that the Treasury Department wants to conceal the list of borrowers. Earlier this week, House Democrats sent a letter to Treasury Secretary Steven Mnuchin requesting the names of all PPP recipients, the dollar amounts of the loans, and the names of applicants who did not receive loans. “Congress has a responsibility to conduct oversight of this $659 billion program, and taxpayers have a right to know how their money was spent,” the letter states.
Mnuchin initially rebuffed congressional requests for such information, saying it was “confidential.” He has since agreed to meet with members of the Senate Small Business Committee and “strike the appropriate balance for proper oversight,” according to a June 15 tweet.
The PPP application form itself says the Small Business Administration, which runs the program, must supply information about borrowers to requestors under the Freedom of Information Act. The information available for disclosure, according to the application form, includes: the names of the borrower company; the borrower’s officers, directors, stockholders, or partners; the collateral pledged to secure the loan; the amount of the loan; the maturity of the loan; and the purpose of the loan. Only a borrower’s “proprietary data” would be redacted under FOIA requests, the form states.
Investors are also watching the increasingly politicized concern that coronavirus cases are rising in many states. A number of states that reopened early, such as Texas, Georgia and Arizona, are now reporting record-high numbers of Covid-19 cases and hospitalizations. Other states that were hard-hit early, such as California, also are showing a resurgence in cases.
Many leading conservatives, including Vice President Pence and Representative Jim Jordan, have said the rise in reported cases just means that testing has gotten better. Those who would instead blame the numbers on people no longer social distancing note that hospitalizations, which have nothing to do with testing, also have increased significantly.
As hospitals around the country faced crowded ICUs, Florida’s Agency for Health Care Administration has reported 75% of the state’s available hospital beds are occupied and several hospitals in Palm Beach and Miami-Dade counties no longer have ICU beds available.
More than 8.5 million people have been infected by Covid-19 worldwide, while 454,000 have died, according to data compiled by Johns Hopkins University. In the United States, 2.1 million people have contracted Covid-19, while more than 118,000 have died.