Stocks drift in early trading
The Dow Jones Industrial Average opened tepidly Wednesday and climbed in early trading, but the other major indexes bounced in and out of the red before posting steady gains.
Prior to the opening bell, Dow futures turned negative after advancing strongly. On Tuesday, the Dow rose 11.37 percent – its biggest one-day gain in 87 years –before the Senate hours later agreed on a $2 trillion stimulus package. It now goes to the House for a vote
In early trading, the Dow rose 679.77 points, or 3.28 percent. After briefly turning negative and lagging, the S&P 500 rose 1.85 percent. The Nasdaq Composite advanced 1.37 percent.
"Coming on the heels of the central banks, there is increasing optimism that politicians are starting to understand the scale of the economic stop coming our way as the death toll across Europe and the US continues to rise," Michael Hewson, chief market analyst at CMC Markets UK, said in a research note.
He said bear markets can experience "sharp and violent counter moves to the upside" and cited the 2008 financial crisis created by the collapse of the subprime mortgage market as an example.
The market's recent resurgence therefore "could be another bull trap, and an opportunity to sell at better levels, if politicians disappoint," Hewson wrote.
The economic stimulus package includes $1,200 checks for many Americans and $500 billion for loans to key industries and expanded unemployment benefits.
Full details have yet to be released, but according to news reports the stimulus package also calls for $367 billion for small businesses, $50 billion for commercial airlines, $8 billion for cargo airlines and $17 billion for companies considered important to national security.
President Donald Trump has urged quick passage of the measure and at one point during the discussions between Republicans and Democrats asked if the Democrats "want the virus to win".
The economic damage from the coronavirus, also called COVID-19, has raised a basic question: How quickly can the US bounce back? On Tuesday, Trump said he hoped the economy would be re-started by Easter, April 12.
Many health officials and politicians believe that date is wildly optimistic. New York Governor Andrew Cuomo said the number of new cases in his state continues to rise and has yet to peak.
Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said Tuesday at a White House news conference:
"I cannot see that all of a sudden, next week or two weeks from now it going to be over. I don't think there's a chance of that. I think it's going to be several weeks."
