Stimulus hopes see US stocks finish the week on a high note

Investors are still hopeful the White House and Congress can reach a deal on more coronavirus aid.

After a week of stimulus-induced volatility, United States stocks closed out the week firmly on the plus side [File: Mike Segar/Reuters]
After a week of stimulus-induced volatility, United States stocks closed out the week firmly on the plus side [File: Mike Segar/Reuters]

Wall Street’s main stock indexes finished the trading week on a high note, with the Dow and S&P 500 posting their second straight weekly gain as investors cling to hope that a new round of coronavirus relief aid can be agreed upon between the White House and Congress.

The Dow Jones Industrial Average finished the session up 161.39 points or just over half a percentage point, at 28,586.90.

The S&P 500 – a gauge for the health of US retirement and college savings reports – finished up 0.88 percent, while the tech-heavy Nasdaq Composite Index closed 1.39 percent to the plus side.

Stocks got a boost earlier in the session after United States President Donald Trump tweeted: “Covid Relief Negotiations are moving along. Go Big!”

Investor spirits were also lifted after the Wall Street Journal, citing people familiar with the negotiations, reported that the White House is preparing a $1.8 trillion stimulus proposal.

Later, during an interview, Trump said he would like to see a “bigger stimulus package, frankly, than either the Democrats or Republicans are offering.”

Talks between US Treasury Secretary Steven Mnuchin – the White House’s point person on stimulus negotiations – and House Speaker Nancy Pelosi failed to yield fruit on Friday, but Pelosi’s camp confirmed they will continue.

Wall Street has been gripped by volatility in the wake of on-again, off-again talks in Washington on a new round of coronavirus virus relief aid for struggling US businesses and households.

US stocks fell sharply on Tuesday after Trump said he had called off negotiations with Democrats in Congress until after the November 3 elections.

But the stock markets bounced back the following day after Trump urged Congress to immediately pass targeted aid for airlines and small businesses, and a new round of $1,200 stimulus checks for individuals.

Meanwhile, investors are also positioning portfolios for a possible win by Democratic presidential nominee Joe Biden on November 3.

Biden has gained a substantial lead over Trump in recent polls.

A new Reuters news agency/Ipsos poll found Americans are losing confidence in Trump’s handling of the COVID-19 crisis.

And while investors ponder what a Biden and Democratic win would mean for a big stimulus package, others are wary about a Democrat pledge to hike corporate tax rates.

Data on Thursday showed the US labour market recovery is struggling and losing momentum. The number of jobless claims in the US came in 20,000 higher than economists expected at 840,000, according to the Labor Department.

Concerns are also growing over the return of lockdowns and restrictions. The World Health Organization on Thursday reported a record one-day jump in global COVID-19 cases.

Another round of lockdowns will cause severe if irreversible pain for the US retail market.

“Retail property was in trouble before the virus, with many locations seeing values under pressure well in advance. Lockdowns provided a further severe jolt, with widespread closures and consumers adapting by shifting to online channels,” Andrew Burrell, chief property economist at Capital Economics, wrote in a Friday note.

Shares of Delta Air Lines, American Airlines and United Airlines all finished higher hopes of more stimulus for the industry.

Airline CEOs continue to warn that additional layoffs are coming unless the government provides more help immediately.

Source: Al Jazeera


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