Treasury Secretary nominee Yellen is urging lawmakers to support President-elect Biden’s $1.9 trillion stimulus plan.
Major US stock indexes closed at new all-time highs on Wednesday as Joe Biden became the 46th president of the United States, fuelling investor wagers that more generous coronavirus relief aid will be unleashed under his new administration.
The Dow Jones Industrial Average gained more than 257 points or 0.83 percent to finish at 31,188.38.
The S&P 500 – a proxy for the health of US retirement and college savings accounts – closed up more than 52 points or 1.39 percent at 3,851.85.
And the tech-heavy Nasdaq Composite Index finished the session more than 260 points or 1.97 percent higher, ending at a record 13,457.248.
Outgoing President Donald Trump left the White House on Wednesday morning for the last time during his term and became the first president in over a century and a half to not attend his successor’s inauguration.
Speaking at a press conference prior to his departure from Washington, DC, Trump touted the strength of the US stock market during his time in office and its comeback from last year’s pandemic lows.
“The stock market is actually substantially higher than it was at its higher point prior to the pandemic,” Trump told reporters, adding, “We built it twice.”
While the stock market has bounced back from its pandemic lows to achieve new highs, the nation’s economic recovery is widening long-festering racial and income inequalities and leaving millions of Americans behind.
The recovery also started to stall in the final three months of 2020 as surging COVID-19 infections ushered in business-sapping restrictions.
Biden inherits an unemployment rate that stood at 6.7 percent in December, nearly double the pre-pandemic rate of 3.5 percent.
The economy shed 140,000 jobs in December – slamming the brakes on seven straight months of jobs creation – and the weakness has continued into this year with nearly a million workers filing for unemployment benefits with states in the week ending January 9th.
But economists and US stock investors see better days ahead, as investors lay bets that more federal spending on virus relief aid and green infrastructure is in the cards.
Last week, Biden unveiled a proposal for a new, massive $1.9 trillion stimulus package to accelerate the nationwide vaccination drive, and give more financial help to struggling households, small businesses and communities that have borne the brunt of the pandemic’s economic fallout.
The measures include giving an additional $1,400 direct cash transfer to qualifying Americans – in addition to $600 stimulus cheques included in December’s $900bn round of virus relief aid – and boosting the federal weekly top-up to state unemployment benefits from $300 to $400.
Democrats now control both houses of Congress – which ultimately controls the nation’s tax and spending policies – but many Wall Street analysts expect horse-trading with Republicans to chip away at the size and scope of Biden’s proposed stimulus.
A preview of the spending battles that lay ahead emerged on Tuesday during the Senate confirmation hearing for Biden’s nominee for US Treasury Secretary, Janet Yellen.
During the hearing, Republican senators expressed concerns about mounting government deficits to fund virus relief measures.
Yellen, for her part, urged Congress to not dwell on the bill for more stimulus and instead “act big”, warning that “without further action, we risk a longer, more painful recession now, and long-term scarring of the economy later.”
Among stocks making headlines:
Shares of streaming giant Netflix surged more than 16.8 percent after the company added more subscribers than expected and it said it no longer needs to borrow funds to finance its growth.