US Stocks Rebounding Early Tuesday as Investors Await Trump’s Financial Relief Plan

U.S. stock market futures are bouncing back early Tuesday after President Donald Trump promised drastic action to help protect the U.S. economy from the financial impact of the coronavirus. Trump’s promise of emergency fiscal support boosted risk appetite enough to generate a 500 point rally in the Dow futures market early in the session.

At 02:32 GMT, the benchmark E-mini S&P 500 Index is trading 2811.50, up 63.75 or +2.32%. The blue chip March E-mini Dow Jones Industrial Average is at 24393, up 516 or +2.16% and the technology-driven March E-mini NASDAQ-Composite index is at 8140.25, up 188.75 or +2.37%.

Trump Floats Ideas on Emergency Fiscal Support

U.S. President Donald Trump on Monday said he will be taking “major” steps to gird the economy against the impact of a spreading coronavirus outbreak and will discuss a payroll tax cut with congressional Republicans on Tuesday.

“We’ll be discussing a possible payroll tax cut or relief, substantial relief, very substantial relief, that’s a big number,” Trump told reporters.

Trump further added his discussions with Senate and House Republicans on Tuesday will center on “a possible tax relief measure” that would provide “a timely and effective response to the coronavirus.”

Trump also told reporters the group will be discussing getting hourly wage earners help, “so they can be in a position where they’re not going to miss a paycheck.”

The potential tax incentives come on top of an $8.3 billion spending package Trump signed on Friday. The package was aimed in part at supporting research for vaccines and helping support states that are battling the outbreak.

Trump did not provide details but added that a press conference will be held on Tuesday.

Additionally, Vice President Mike Pence said the administration was consulting Congress on providing paid sick leave to workers, an idea that Democrats already have been trying to advance.

Mixed Messages from Trump Administration Contributing to Stock Market Weakness

“When in doubt, get out” has been the theme the past few days in the U.S. equity markets with some investors dumping shares because of the lack of conviction from Trump administration officials regarding the seriousness of the coronavirus outbreak. Mixed messages are causing doubts, and the doubts are creating enough fear to encourage investors to trim their volatile, risky stock holdings.

On Monday, Health Secretary Alex Azar stressed in an interview on Fox News that the United States regards the situation with gravity, saying the coronavirus “is a very serious health problem. Nobody is trying to minimize that.”

However, later in the day, Trump downplayed the impact of the outbreak in a tweet.

“So last year 37,000 Americans died from the common Flu. It averages between 27,000 and 70,000 per year. Nothing is shut down, life & the economy go on,” he said. “At this moment there are 546 confirmed cases of CoronaVirus, with 22 deaths. Think about that!”

The stock market may not be able to stabilize until investors become confident enough in knowing the government has a handle on the virus, and is successful in minimizing its risks to human lives and the economy.