Still Hopeful of Stimulus, Stocks Bump Up 5%

MANHATTAN (CN) — Investors still anxiously awaiting the third stimulus package from Congress traded optimistically this morning, with markets throughout the world quickly recouping Monday’s losses.

The Dow Jones Industrial Average, S&P 500 and Nasdaq all gained more than 5% in the opening seconds of Tuesday’s market.

A currency trader walks by screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room in Seoul, South Korea, on Tuesday. (AP Photo/Lee Jin-man)

All eyes are now on Congress, which is expected soon to push through a massive $1.8 trillion stimulus package. Senate Minority Leader Chuck Schumer, D-N.Y., said late Monday that “we expect to have an agreement in the morning.”

The stimulus, Phase III of legislative action to combat coronavirus, has faced several road bumps.

Democrats already have twice blocked the bill, claiming a $500 billion set aside for “distressed businesses” could be used without any oversight by the treasury secretary.

“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.

President Trump waved away such concerns during a Monday press conference, claiming, “I will be the oversight, I will be the oversight.”

After reports that a deal between parties was close on the stimulus, futures skyrocketed early Tuesday, with the Dow, S&P and Nasdaq all hitting their 5% “limit-up” thresholds at various points.

Markets in Asia closed up across the board, despite more bad news related to coronavirus.

In Japan, which just announced the summer Olympics in Tokyo would be postponed until 2021, the Nikkei increased more than 7%. Markets in China, where the gross domestic product during 2020’s first quarter is expected to drop 11%, closed up 2 points.

European markets also rallied, despite a boom in coronavirus-related deaths over the weekend. The pan-European Stoxx 600 was up more than 5% at 8 a.m. ESt, and German’s DAX up more than 6.5%.

Investors had seemed initially cool to other measures designed to reinvigorate the economy.

bevy of measures announced Monday by the Federal Reserve to increase liquidity, including buying up corporate and municipal debt “as necessary” and without a set limit going forward, did little to mollify investors.

Covid-19, the new strain of coronavirus responsible for a global pandemic, has now affected more than 392,000 worldwide and 47,000 confirmed throughout the entire United States, according to data compiled by Johns Hopkins University.

Data show more than 17,000 have died globally from the virus, with more than 500 deaths in the United States.

Trump has grown increasingly frustrated with the economy slowdown, hinting that he may soon ease restrictions to let people and companies go back to business as usual. “I’m not looking at months, I can tell you that,” the president said Monday.

Other politicians also have suggested the economic trade-offs may no longer be worth it to keep primarily older Americans safe from the virus.

Appearing on “Tucker Carlson Tonight” Monday night, Texas Lieutenant Governor Dan Patrick said many older Americans are willing to potentially expose themselves to the virus in the hopes of jump-starting the economy.

“My message is let’s get back to work, let’s get back to living, let’s be smart about it,” Patrick said. “And those of us who are 70-plus, we’ll take care of ourselves. But don’t sacrifice the country.”

The federal government’s recommendation of 15 days of social distancing would end March 30.

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