Dow futures fall 100 points as Trump calls Covid stimulus bill unsuitable
U.S. stock futures fell in night trading Tuesday after President Donald Trump raised concerns about the new Covid-19 aid package that could delay the use of funds for struggling Americans.
Dow futures were down 110 points. S&P 500 futures and Nasdaq 100 futures lost 0.5% and 0.4%, respectively.
Late on Tuesday, Trump called the new $ 900 billion Covid aid bill an inappropriate “disgrace” and admonished lawmakers to change the bill’s content, particularly the amount earmarked for direct payments to Americans. Trump did not threaten to veto the legislation, but asked for an “appropriate bill to be received, otherwise the next government will have to deliver a Covid aid package”.
On Tuesday, the Dow Jones Industrial Average lost 200 points even though Apple shares were up 2.9%. The S&P 500 was down 0.2% on the third day of losses. Travel-related stocks came under pressure amid ongoing concerns over the UK’s new strain of coronavirus
Stocks slipped despite the fact that, after months of negotiations, Congress passed a bill offering $ 900 billion in pandemic aid. Of course, after robust stock returns in 2020, investors could take profits towards the end of the year.
The package includes, among other things, additional unemployment benefits, more small business loans, direct payments of US $ 600 and funding for the distribution of Covid-19 vaccines. President Donald Trump is expected to sign the law in the coming days.
The “stock market action reinforces the old adage” buy the rumor (another stimulus package) and sell the news “,” Jim Paulsen, chief investment strategist at Leuthold Group, told CNBC. “Over the past few days, stocks have been quite disappointing in the face of additional $ 900 billion in financial relief. Despite more financial aid, the S&P 500 leadership has returned to technology and away from cyclicality.”
The Nasdaq Composite outperformed Tuesday, closing 0.5% on a new record as Amazon, Apple and Microsoft all closed higher. The stationary bicycle manufacturer Peloton grew by 11%.
The Russell 2000 small-cap benchmark rose 0.99% to hit a record high. Small caps are up 105.94%, more than doubling their lows in March.
“The big winners, however, have been small-cap stocks, which appear to be rising lately with or without the prospect of additional stimulus,” added Paulsen. “Cyclical stocks, and especially international stocks, were hit by a sharp rebound in the US dollar today, which reversed part of its recent weakness.”
Despite the recently passed tax subsidy, millions of Americans are still struggling to find work as the pandemic has roused the workforce.
Last week’s unemployment claims are published on Wednesday at 8:30 a.m. (CET). Economists polled by Dow Jones are projected to see 888,000 Americans registered as unemployed last week, up from the previous week’s 885,000.
The U.S. reports at least 215,400 new Covid-19 cases and at least 2,600 virus-related deaths daily, based on a seven-day average calculated by CNBC using data from Johns Hopkins University.
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