Wall Street closed mixed as Senate bill stalls

March 26, 2020 - 1 week ago
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Wall Street, U.S. stocks recovered further on Wednesday, after scoring their first back-to-back gains since a brutal, coronavirus pandemic sell-off began five weeks ago.

Unfortunately, much of the gains faded later in the New York daily trade session as a last-minute dispute threatened to hold up a $2-trillion economic rescue package in Congress.

However, congressional efforts to quickly pass an estimated $2 trillion stimulus package hit another obstacle on Wednesday, hours after legislative leaders and the Trump administration struck a deal aimed at combating the economic consequences of the coronavirus pandemic.

The Senate had been set to vote on the mammoth bill on Wednesday, but rank-and-file members voiced objections while lawmakers were finalizing the bill’s full text, slowing the process.

By late afternoon it wasn’t clear when the Senate would vote on legislation that would provide direct financial checks to many Americans, drastically expand unemployment insurance, offer hundreds of billions in loans to both small and large businesses, refill drained state coffers and extend additional resources to health-care providers.

“A fight has arrived on our shores,” said Senate Majority Leader Mitch McConnell on the Senate floor. “We did not seek it. We did not want it. But now, we are going to win it.”

But as Senate leaders rushed to move the bill through the chamber swiftly on Wednesday, protests from Republican lawmakers over the unemployment provisions in the bill threatened to draw out the process further.

Sen. Bernie Sanders, a Democratic presidential candidate, said he would slow down the bill if the group of Republicans did not withdraw their threat, creating a high-stakes standoff in the final stages of the negotiations.

Meanwhile, House Speaker Nancy Pelosi said Wednesday that she is optimistic about the legislation and said no decision had been made about when the House will try to take up the legislation if it clears the Senate as expected.

The House is expected then to attempt quickly to pass the bill by unanimous consent.

Treasury Secretary Steven Mnuchin, who has led negotiations on behalf of the White House, said he had spoken to President Trump about the agreement and that Mr Trump would absolutely sign it as it is currently written.

Former Federal Reserve Chairman Ben Bernanke said Wednesday the U.S. economy would experience a quick rebound after a “very sharp” recession, lifting investor sentiment.

The Federal Reserve and other central banks are also offering tremendous support by cutting interest rates and supporting lending markets.

Still, investors say they need to see the number of new infections peak and start declining before they can feel comfortable knowing how deep the looming economic downturn will be.

Back on Wall Street, all three of the major U.S. stock indexes ended mixed towards the closed but were well off their highs.

The Dow Industrial Average was the best performing major index, rallied as much as +1,200 points intra-day, but most of those gains were quickly lost with the closed up +495.64 points or +2.39% to 21,200.55.

The Standard & Poor’s 500 indexes ended to a gain of +28.23 points, or +1.15% to 2,475.56, while the tech-heavy Nasdaq composite lost -33.56 points or -0.45% to 7,384.30.

The S&P 500 strung its first consecutive gains since mid-February.

Meanwhile, Boeing soared +24.3%, triggered partially by expectations that it stands to gain from the aid package.

Other travel-related stocks also surged, recouping a fraction of their massive losses over the last month. Royal Caribbean Cruises jumped +23% on Wednesday, but it’s still down -68.2% for the year.

Nike rose +9.2% after it said more robust online sales in China during the coronavirus outbreak helped it offset plunges in revenue caused by the shutdown of its stores across the country.

The company said it would follow a similar playbook in other countries as the outbreak spreads around the world. It also said sales are bouncing back in China, where the epidemic has eased, and most Nike stores have reopened.

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