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US Stock Market Overview – Stocks Rally Led by Utilities Following Fiscal Policy Annoucements

Retail Sales miss expectations
David Becker

US stocks rebounded on Tuesday but whipsawed from positive to negative territory. The major indices began to rally in the morning as the White House announced a fiscal package that would help create a buffer for individuals that have been told to go home. US yields rose, as the Fed announced that it was providing a lending facility in commercial paper that will used for small businesses to extend credit lines. The facility will be available directly to banks. Most sectors in the S&P 500 index were higher, led by gains in utilities, energy shares bucked the trend. Oil prices tumbled more than 5% weighing on energy shares. Retail sales fell 0.5% in February, indicating the consumer sector was slowing even before the coronavirus struck.

Retail Sales Rise More than Expected

Retail sales fell 0.5% in February according to the Commerce Department. The drop in sales followed a solid 0.6% gain in January. The February decline came from weakness in a number of areas including a 0.9% fall in auto sales and a 2.8% drop at gasoline stations. Excluding motor vehicles and parts, retail sales were still down a sizable 0.4%. The February Retail Sales report did not cover the entire month, which started to deteriorate quickly toward the end of February.

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The White House Roles Out a Fiscal Plan

Treasury Secretary Steven Mnuchin said in a morning news conference that the program could total $1 trillion, though he does not expect it to reach that high. White House announced a fiscal policy that was geared to employees that will be directly affected by social distancing. The administration is proposing a bill that will provide business interruption money, that will directly pay individuals that are out of work because they are ordered to stay home. The treasury secretary also announced that individuals that owe taxes in April will have a 90-day period to hold on to the money without penalties or interest.

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