The S&P 500 is recovering from a three-day streak of dangerous luck, even after Trump slammed the Covid-Stimulus invoice
US stocks surged Wednesday even after President Donald Trump criticized the new Covid-19 aid package, a move that could delay the use of funds for struggling Americans.
The Dow Jones Industrial Average rose 250 points while the S&P 500 rose 0.6% to halt a three-day losing streak. The Nasdaq Composite rose 0.23% to hit a new all-time high.
Cyclical sectors – market pockets most sensitive to economic recovery – drove the gains. Energy and finance were the two best-performing groups, rising 3.2% and 1.9%, respectively. Materials and industry were also on the rise.
Late on Tuesday, Trump called Covid’s new $ 900 billion aid package an unsuitable “disgrace” and warned lawmakers to change the content of the bill, in particular to increase direct payments from $ 600 to $ 2,000. House spokeswoman Nancy Pelosi agreed to Trump’s call for higher payments, saying House Democrats would seek unanimously to pass a standalone bill on Thursday.
Trump did not threaten to veto the legislation, but asked for an “appropriate bill to be received, otherwise the next government will have to deliver a Covid aid package”.
“President Trump’s call for a revision of the COVID Relief Act to increase the individual payment amount to $ 2,000 adds to the uncertainty for the coming days. However, our basic case remains that the bill passed by Congress becomes law,” Ed wrote Mills overnight by Raymond James. “The bill will become law on January 3rd with no action by the President – although the government will be closed if the bill is not signed by December 28th.”
Congress passed the bailout bill this week after months of negotiations with $ 900 billion in pandemic aid. The package includes, among other things, additional unemployment benefits, more small business loans, direct payments of US $ 600 and funding for the distribution of Covid-19 vaccines.
“It feels like the market is following the rule of watching what it does, not what it says, regarding the president’s nightly drive-by footage for Covid’s aid package,” said Art Hogan, chief executive -Market strategist at National Securities. “There is probably enough time to optimize the auxiliary laws to the point where they can be passed and signed.”
Travel-related stocks, which sold out earlier this week, rebounded as concerns over a new strain of coronavirus from the UK subsided. United Airlines and Delta each rose more than 3%, while Carnival and Norwegian Cruise Line each gained 6%. Health experts said the vaccines in production would be effective against the new variant.
On Wednesday, Pfizer and BioNTech announced a second contract with the U.S. government to deliver an additional 100 million doses of their jointly developed Covid-19 vaccine. The deal increases the total number of cans to be shipped to the US by the end of July next year to 200 million.
In terms of data, US jobless claims for the week ended December 19 were 803,000, better than an estimate of 888,000, according to economists polled by Dow Jones. However, both core durable goods and personal income fell below expectations in November.
The S&P 500 posted its third consecutive loss day after its most recent rally after highs. Some investors took profits after an unexpected year of solid earnings. The broad stock benchmark is up more than 14%, and there are only six trading days left in 2020.
– CNBC’s Thomas Franck contributed to the coverage.
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