The stock market may be too optimistic about stimulus chances
A fiscal stimulus package is the one thing that could put the stock market on an upward trajectory into the election, but some strategists say the odds of that happening are still rather low.
President Donald Trump, within hours Tuesday, both dashed hopes for a stimulus package by calling off administration talks with Democrats, and then rekindled them by tweeting about aid to airlines and other smaller targeted packages.
Stocks rise after Trump backs relief for airlines—Larry Kudlow and others on what’s next
Stocks were up on Wednesday after President Trump, who on Tuesday had said he was ending talks on coronavirus relief legislation, urged Congress to approve coronavirus relief for airlines and other targeted measures.
Larry Kudlow, White House economic advisor, says relief needs to be targeted.
Wall Street ends higher on hope that partial coronavirus stimulus deal may occur
U.S. stocks closed sharply higher on Wednesday as investors regained hope that at least a partial deal on more U.S. fiscal stimulus may happen.
The Dow Jones Industrial Average .DJI rose 530.7 points, or 1.91%, to 28,303.46, the S&P 500 .SPX gained 58.5 points, or 1.74%, to 3,419.45 and the Nasdaq Composite .IXIC added 210.00 points, or 1.88%, to 11,364.60.
Top White House officials downplayed the possibility of more coronavirus relief, while House Speaker Nancy Pelosi disparaged Trump for backing away from talks on a comprehensive deal.
Indexes held gains after the Federal Reserve released minutes from its last policy meeting. The minutes showed U.S. central bankers, having agreed unanimously in August on a broad new approach to monetary policy, were divided in September over how to apply their new principles in practice.
With the U.S. presidential election just weeks away, focus later Wednesday may turn to a debate between Vice President Mike Pence and Democratic opponent Kamala Harris.
“People are becoming more comfortable with the lead that Biden has and focusing on the potential positives that would come from a Democratic White House and not the stereotypical (view of) negative for the stock market that was maybe in vogue three months ago,” James said.
Investors also are preparing to hear from companies soon on the third quarter, with earnings expected to kick off next week. Analysts expect earnings at S&P 500 companies to have dropped about 21% in the quarter from a year ago, according to IBES data from Refinitiv.
Reference: CNBC, Reuters
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