US Stock Market Overview – Stocks Drop as Senate Fails to Move the Needle

US stocks were hammered on Monday but experienced a wild rise as most were in the black mid-day. Price action was negative as the open as traders digested information that showed that the Senate had failed to pass a procedural bill that would allow them to vote on a rescue package. Prices then rallied as the Fed announced that they would purchase as many treasuries as needed to bring the economy back to life.

The Senate then failed to reach a consensus and move forward later in the session which put further pressure on stock prices. US yields moved lower on Monday, but the dollar remains buoyed as the yen fell. Zoom shares, (ZM) continued to rally as more an more businesses turned to online services. The VIX volatility index eased for a third consecutive trading session despite the decline in the large-cap S&P 500 index. All sectors in the S&P 500 index were lower led down by real-estate, communications were the best performers in a down tape.

Fed Moves but the Senate is Stuck

The Federal Reserve was active today announcing that they would purchase treasury bonds and agency bonds at a rate that would buoy the overall economy. It’s an unlimited number of purchases. The Fed also announced that they were setting up a 300-billion lending facility which is expected to target loans for small businesses. The central bank unveiled a new generation of lending facilities to prevent a liquidity crunch from turning into a solvency crisis for American businesses.

Despite the Fed moving quickly, but fiscal policy remains stuck in the mud. Both sides are vying for political wins in the face of a disaster. The Senate wants a bill to move forward that provides all the money needed and both sides agree. The democrats want accountability for every dollar spent and stipulations on what companies can use the money for.  An example is that the Democrats do not want companies to be able to make money and be able to fire employees. The business would only get the money if they used it to pay employees.