US Stocks gain on hopes of a piecemeal stimulus package

US Stocks gain on hopes of a piecemeal stimulus package

Wall Street’s main indexes opened firmly in positive territory on Wednesday, after President Donald Trump – hours after announcing on Tuesday that he had called off talks on a new stimulus package – appeared to reverse course partially and urge Congress to pass targeted financial relief aid.

The Dow Jones Industrial Average jumped nearly 200 points or more than 1 percent higher, at the open of trading on Wall Street and kept climbing. Less than a half hour into trading, it was up more than 300 points.

The S&P 500 – a gauge for the health of US retirement and college savings reports – opened 0.7 percent higher, while the tech-heavy Nasdaq Composite Index opened 1.05 percent to the plus side.

President Trump in a series of Tweets on Tuesday said that he had instructed his representatives to halt talks with Democrats in Congress over a new round of pandemic relief aid until after the November 3 election.

The news triggered a sharp sell off in US stocks.

Then, hours later, Trump tweeted that he was ready to sign a stand-alone bill that would send a new round of $1,200 direct cash payments to struggling Americans.

He also urged the House and Senate to approve more help for flatlining businesses, including a $25bn lifeline to the country’s struggling airlines which have been pleading for more aid to avoid mass layoffs.

While Trump’s support for targeted aid clearly lifted investor spirits on Wednesday, some analysts were skeptical about the impact it could have.

“A piecemeal approach might allow for only a very limited amount of fiscal relief,” Alec Phillips, an analyst at Goldman Sachs wrote in a Wednesday note.

Trump announced he was halting stimulus talks just hours after Federal Reserve Chairman Jerome Powell on Tuesday warned that the US economic recovery is in danger of faltering without more government stimulus.

In a virtual address to the National Association for Business Economics, the Fed chief warned: “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”Many sectors have been left in tatters.

Airline stocks rallied on Wednesday in the wake of Trump’s appeal for a $25bn lifeline.

The airline industry has been decimated by coronavirus lockdowns and restrictions. Last week, nearly 40,000 airline workers were informed they would be laid off or furloughed.

Airline CEOs have warned that more cuts could come unless they receive government aid.

A waiter in a face mask to protect against the coronavirus carries food to diners seated outdoors at a restaurant in Alexandria, Virginia, United States [File: Kevin Lamarque/Reuters]Small businesses, especially bars, restaurants, and retail, have also been battered by the COVID-19 crisis and months-long shutdowns as well and are in desperate need for additional aid. As the US heads towards the winter months, more restrictions are likely.