MANHATTAN (CN) — Even with a stimulus package reportedly nearing completion and unprecedented moves by the Federal Reserve, U.S. stock markets continued their downward trajectory Monday.
The Dow Jones Industrial Average closed at 18,576 points, about a 3% decrease for the day. The S&P 500 fell about 2.9% as well, while the Nasdaq closed slightly below its opening.
Even before markets opened, stock futures almost guaranteed a decline in the day’s markets. However, an announcement early Monday morning by the Federal Reserve helped dampen losses, with the Dow and S&P 500 losing two points in early morning trading.
Part of a bevy of measures to increase liquidity, the Fed vowed to buy up corporate and municipal debt “as necessary” and without a set limit going forward.
“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.
The Fed, which had already pledged to buy more than $1 trillion in Treasuries and mortgage-backed debt earlier this month, also said it would soon open a lending program for small- and medium-sized businesses.
After the Fed’s announcement, all eyes went to Congress, where work on a third stimulus bill remains ongoing.
The bill, pegged with a price tag of nearly $2 trillion, has repeatedly stalled over its inclusion of secretive $500 billion bailout for “distressed businesses.”
Democrats argue that measure is too vague, includes very few strings, and gives the Treasury secretary too much discretion in doling out funds.
“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,” Senator Elizabeth Warren, D-Mass, said over the weekend.
While both Senate Minority Leader Chuck Schumer and Treasury Secretary Steven Mnuchin said Monday a deal was “very close,” Senate Democrats blocked the bill from moving forward before the closing bell.
Markets dropped again, with the Dow dropping almost 4%, after news broke that the third stimulus might not be passed until Friday.
Covid-19, the new strain of coronavirus responsible for a global pandemic, has now affected more than 367,000 worldwide and 40,000 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 more than 16,000 have died globally from the virus, with about 500 deaths in the United States.
As the economy continues to tank, President Trump has hinted he may try to get Americans back to work and out of their homes soon.
“WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM ITSELF,” the president tweeted early Monday morning. “AT THE END OF THE 15 DAY PERIOD, WE WILL MAKE A DECISION AS TO WHICH WAY WE WANT TO GO.”
That period would end next Monday.
Larry Kudlow, one of the president’s key economic advisers, echoed this sentiment Monday in a Fox News interview. “Let’s see how this thing plays out,” he said, adding that, “we’re going to have to make some difficult trade-offs.”