US Stock Indexes Post Modest Gain in Overnight Trade as Investors Pin Hopes on Fiscal Stimulus PackageAn all-encompassing coronavirus economic stimulus package remained stalled in the U.S. Senate on Monday as lawmakers haggled over its provisions, but the U.S. Treasury Secretary voiced confidence a deal would be reached soon.
Losses on Wall Street deepened on Monday as the rapidly spreading coronavirus drove more U.S. states into lockdown, while overshadowing extraordinary moves by the U.S. Federal Reserve designed to keep open lines of credit in the economy.
To put it into perspective, after recently slashing interest rates to near zero, the Fed will now lend against student loans and credit card loans, as well as back the purchase of corporate bonds and make direct loans to companies.
On Monday, the benchmark S&P 500 Index settled at 2237.40, down 67.52 or -2.29%. The blue chip Dow Jones Industrial Average finished at 18591.93, down 582.05 or -2.29% and the technology-based NASDAQ Composite closed at 6860.67, down 18.85 or -0.22%.
Stocks Fail to Hold Early Gains
The announcement of the unprecedented moves by the Fed briefly lifted U.S. stock index futures during Monday’s pre-market session, but investor focus shifted to the mounting death toll from the coronavirus and a wave of state lockdowns, sending futures prices sharply lower shortly after the cash market opening. The sell-off also put the S&P 500 Index in a positon to post its worst month since World War Two.
Global Economy Expected to Contract
Maryland, Ohio, Louisiana and Delaware joined New York and California in asking people to stay home, foreshadowing a near halt in economic activity and more pain for U.S. equities, and prompting several analysts to slash their growth forecasts, Reuters reported.
Goldman Sachs expects an outright contraction in global real gross domestic product in 2020 on the back of a 24% plunge in U.S. real GDP in the second quarter: two-and-a-half times as large as the previous post-war record.
Mnuchin Expresses Hope a Deal is ‘Very Close’ on $2 Trillion Coronavirus Aid Package in U.S. Senate
An all-encompassing coronavirus economic stimulus package remained stalled in the U.S. Senate on Monday as lawmakers haggled over its provisions, but the U.S. Treasury Secretary voiced confidence a deal would be reached soon.
On Monday, a proposal to provide $2 trillion in stimulus fell short of the 60 votes needed to advance in the Senate after the Democrats successfully argued the measure contained too little money for states and hospitals and not enough restrictions on a fund to help big businesses.
Treasury Secretary Steven Mnuchin, the Trump administration’s point person on coronavirus legislation, shuttled in and out of Senate leaders’ offices.
“I think we’re very close,” Mnuchin told reporters. “We’re trying to finish it up tonight.”
Republicans expressed frustration and accused Democrats of obstruction during a national emergency.
Republican Senate Majority Leader Mitch McConnell said, “Why are the American people still waiting? Why are Democrats filibustering the bipartisan bill they helped write?”
However, Democrats said they thought an agreement was close.
“Take a deep breath. We’re gonna pass this bill,” Senator Dick Durbin, the chamber’s No. 2 Democrat, said.