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Opening: agreement on $2 trillion stimulus package U. S. stocks open up and fall
Mar 25,2020
Source:Sina Finance and Economics
The content below was translated by Tencent automatically for reference.

SMM news: on the evening of the 25th Beijing time, U. S. stocks opened Wednesday mixed. The market is still focused on the development of the epidemic and its economic impact, as well as national responses. The White House and the US Senate have reached an agreement on a stimulus package to fight the epidemic.

The Dow rose 229.45 points, or 1.11 percent, to 20934.36. The Nasdaq fell 5.78 points, or 0.08 percent, to 7412.07. The S & P 500 fell 2.22 points, or 0.09 percent, to 2445.11.

Bipartisan agreement on stimulus package in US Senate

According to several media reports, the White House and the Senate announced an agreement to fight the effects of coronavirus on a $2 trillion stimulus package.

According to reports, the agreement plans to provide $1200 in cheques to many Americans, $367 billion to small businesses, $50 billion to passenger airlines and $8 billion to cargo airlines. And $17 billion in aid "for companies that are critical to national security."

The Senate is expected to vote on the bill later on Wednesday before it is submitted to the House of Representatives, both houses of Congress vote to pass it, and then submit it to US President Donald Trump for signature to make it legislation.

Senior members of the U.S. Senate and White House aides have been negotiating a stimulus package and are said to be very close to reaching an agreement in the last few hours.

Although details of the stimulus package have not yet been released, according to sources, negotiators are working on a package that includes tens of billions of dollars in aid to businesses, states and cities, and checks to most Americans. Loans and aid to small businesses to maintain their wages, expand unemployment insurance, delay taxes and a series of measures.

"We have finally reached an agreement," Senate Majority Leader Mitch McConnell (Mitch McConnell) said in a speech to the Senate. In fact, the stimulus package has reached the level of wartime investment in our country. "

Senate Minority Leader Chuck Schumer (Chuck Schumer) said: "this is not a time to celebrate, but a time to celebrate."

Schumer said the stimulus package to deal with the virus included $130 billion for the health care system and $150 billion for state and local governments. He believes the Senate will pass stimulus legislation to deal with the epidemic on Wednesday.

White House spokesman Grisham also said President Trump will sign the plan after a vote in Congress, and the president is fully aware of the legislation.

Us stocks rebounded on Tuesday analysts are still worried about the poor outlook for the market

Us stocks rebounded epic on Tuesday, with the Dow closing up more than 2100 points, or more than 11 per cent, its biggest one-day percentage gain since 1933 and the biggest one-day gain in history. The S & P 500 closed up 9.4%, its biggest one-day percentage gain since October 2008.

Despite Tuesday's sharp rebound in U. S. stocks, some on Wall Street remain concerned about the market's poor outlook, especially in the absence of clear signs that the new crown outbreak will soon be contained.

"this is a one-day bull market," Jim Kramer (Jim Cramer) of CNBC said in a closing comment on US stocks after the close on Tuesday. Stocks rose so much that they behaved as if they were going to be fine in the second half of the year. But it's hard for me to find a good reason why it should be good in the second half of the year. I hate this skyrocketing. Just as the stock market plummeted, it was a rebound driven by machine trading. Let's wait and see. "

Last week's (Cboe) volatility index, (VIX), a well-known measure of market panic, rose as high as 82.69 points, breaking the peak of the financial crisis. On Wednesday morning, the index remained above 60. The long-term historical average of the index is about 19:00.

Other investors believe that the stock market should have rebounded a long time ago because the stock market pricing had reflected the worst-case scenario, when the new coronavirus epidemic caused widespread shutdowns and heavy losses to the economy. They believe that even if new crown virus infections continue to surge, the stock market may continue to rebound because the market is already seriously oversold.

The market is still closely watching the spread of the new global coronavirus epidemic. Spain reported a record increase in new crown deaths, with 504 more deaths on Tuesday alone. According to Johns Hopkins University, there are more than 430000 new cases of infection in the world, more than 55000 cases in the United States and more than 69000 cases in Italy.

James Brad (James Bullard), now chairman of the St. Louis Fed, said the outbreak had left the US economy facing a huge systemic shock in the short term, but would rebound strongly after the worst of the outbreak. Brad says the unemployment rate in the United States will soar to 30% this week, even higher than during the Great Depression.

The analysis pointed out that despite the super easing of central banks around the world, especially the unlimited bond purchase program announced by the Federal Reserve, coupled with economic stimulus measures by governments, the intensification and spread of the new crown epidemic and the downturn in economic data will still be a major drag on the market.

S & P global rating released a report on the 25th, the agency's latest forecast that the European and American economies face increasing downside risks. Last week the S & P global rating forecast that US GDP would shrink by 6 per cent in the second quarter from a year earlier, but that figure now looks at least twice as high.

Trump's hope to restart the US economy at Easter raises questions

The new crown virus outbreak has caused economic and political damage, sparking a wide debate about how quickly the United States can return to normal. The re-election of US President Donald Trump will depend to a large extent on the performance of the US economy in recovering from the crisis.

Trump said at the White House on the 24th that he hopes to reopen U. S. economic activity on April 12 (Easter) and relax restrictions in response to the new crown epidemic. Trump said he did not want the impact of prevention and control measures to be more serious than the epidemic itself. "thousands of people die from influenza in the United States each year, and the number of deaths caused by traffic accidents is even higher. We have to get back to work. "

But US politicians and market analysts are sceptical about the timetable.

Nancy Pelosi, speaker of the House of Representatives, has expressed strong opposition to Trump's proposal to "open up" the United States and resume business activities as soon as possible. Pelosi says the economy will naturally recover after the new crown outbreak.

In response to Trump's hope that the United States would be "open" by mid-April, Pelosi said in an interview with CNN that Trump should listen to the advice of scientists and should pay attention to "respect science and pay attention to evidence."

Wall Street also believes that a premature resumption of economic activity could be counterproductive. Microsoft (149.11380.772%) founder Bill Gates said on the 24th that it would be irresponsible to decide prematurely to return to normal economic life. He believes that for the United States, complete isolation for 6 to 10 weeks is the only viable option to block the spread of the virus.

Axel Merk, Merk Investments's chief investment officer, said investors would not be pleased by the news that Trump would restart the US economy soon, and that they remained concerned about the uncertainty of the epidemic and the economic damage it would cause.

"the market will react badly because they already know it won't work," Merk said. From a medical point of view, in order to curb the exponential growth of infections, we must adopt a policy of local isolation. "

Jennifer Pline, head of wealth management at Cambridge Trust, said it was too early to tell whether to restart the economy. "since we are just beginning to seal everything quite tightly, we have to wait for a while until we know more about the virus and have fewer cases of infection," he said. "

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