Stock futures rose in late trading Thursday as traders considered the details of President-elect Joe Biden’s newly unveiled stimulus proposal and weighed the likelihood of the package getting advanced quickly through Congress.
Contracts on all three major indexes traded just above the flat line Thursday evening, shaking off declines during the regular trading day. Both the Dow and Nasdaq hit record intraday highs earlier before closing lower.
Biden outlined his $1.9 trillion coronavirus relief proposal late Thursday, which included a host of additional relief measures to add to the provisions included in the $900 billion package Congress passed in December.
Biden’s proposal, designated the American Rescue Plan, seeks to offer stimulus payments of $1,400 to most Americans, increase enhanced federal unemployment benefits by $100 to $400 per week and extend these through the end of September, and provide $350 billion in aid to state and local governments, which had been excluded from Congress’s latest package. It also seeks to raise the minimum wage to $15 per hour and provide additional funds to schools and to ramp up COVID-19 testing and vaccination, among other provisions.
The overall size of the package was largely in line with what investors had been anticipating from the proposal, and would be rivaled only by the $2.2 trillion relief from the CARES Act last spring. Whether or not the package will actually get advanced in the near-term is the next key question for markets, some pundits noted.
“We’ve got to distinguish between willingness and ability. I have no doubt in my mind that the incoming Biden administration wants to go big. They want to go big on relief, they want to go big on infrastructure, they want to go big on local and state government, and for good reason,” Mohamed El-Erian, president of Queens College at Cambridge University and chief economic adviser to Allianz, told Yahoo Finance on Thursday. “But they have a razor thin majority in Congress, razor thin in the Senate. And getting that through is not going to be easy. Add to that, there’s questions about the impeachment process, there’s questions about nominations, there’s COVID.
“So the market, I think, has priced in a big package. That is consistent with what the Biden administration wants to do. The question that the market is going to have to cope with is, is it able to do so given what else the Senate has to look at in the next few weeks and months,” he added.
Still, support to financial markets and the economy has come from multiple fronts during the pandemic, and many members of the Federal Reserve, for their part, have recently doubled down on their commitment to keeping crisis-era policies in place for the time being. Fed Chair Jerome Powell said during a webinar on Thursday that he believed the U.S. economy was still “far from our goals,”and that “now is not the time to be talking about exit” when it came to considering the Fed’s thinking around its massive, pandemic-era asset-purchase program.
6:01 p.m. ET Thursday: Stock futures open higher
Here were the main moves in markets, as of 6:03 p.m. ET Thursday:
S&P 500 futures (ES=F): 3,794.75, up 3.5 points or 0.09%
Dow futures (YM=F): 30,932.00, up 23 points or 0.07%
Nasdaq futures (NQ=F): 12,918.75, up 17.75 points or 0.14%
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