Stock indexes closed with significant growth on Wednesday, after fell sharply on Tuesday. President Donald trump has changed the rhetoric from the rejection of negotiations on the adoption of the bill on the stimulus package for the economy on the willingness to take such measures as unemployment benefits of $1,200 and assistance to victims of the pandemic industries.
On Wednesday the main US stock indexes grew behind the expectations of government aid for the economy during a pandemic coronavirus.
The Dow Jones ended the week with a growth of 1.9%, which was the best growth since July, the S&P 500 rose 1.74%, while the Nasdaq Composite index by 1.88%.
The President of the United States Donald trump wrote on Twitter on Wednesday: “the House of representatives and the Senate should IMMEDIATELY approve $25 billion in support of payment of salaries to the employees of the airlines and $135 billion for the security Program salaries for small business. They will both be fully paid for by the unused funds in accordance with the Law “Cares”. Get the money. Sign the [order] now!”.
“If you send separate accounts for the incentives [for further unemployment payments] ($1200), they will be IMMEDIATELY transferred to our great people. Ready to sign right now. Are you listening Nancy?” – trump wrote, referring to speaker of the house of Representatives Nancy Pelosi.
Behind these messages was followed by the growth stocks of airlines and cruise companies that may receive funds for support during the current crisis.
Shares of United Airlines (UAL) increased by 4.3% and Delta Air Lines (DAL) gained 3.5%. Airlines also rose after JPMorgan analyst upgraded the rating of several companies in the industry. Boeing shares (BA) rose by 3.2%, Canival (CCL) jumped 5.3%, and Norwegian Cruise Line (NCLH) and Royal Caribbean (RCL) rose 4.5% and 2.8%, respectively.
Market sentiment also improved after the pharmaceutical company Eli Lilly (LLY) said that waiting for permission from FDA to use their drugs coronavirus. Shares of Eli Lilly rose 3.4%.
Growth on Wednesday was preceded by a sharp market decline on Tuesday, when trump wrote on Twitter that gave the order to suspend negotiations on the stimulus package and the bill “Cares 2” “until after the election, when I win” because Democrats and Republicans couldn’t agree on the size of the budget, at $2.4 trillion. and $1.6 trillion. respectively.
The trump statement was preceded by a speech by fed Chairman Jerome Powell, about the need for early adoption of the aid package. Together with the support of the words of Powell, trump wrote about the strength of the US economy at present.
Analysts have apprehended the information on the suspension of the negotiations as inconsistent and “illogical step”, which is a blow to trump’s rating ahead of the elections on 3 November.
Rival trump in the election, Joe Biden, and policy Democrats criticized the President’s decision.
A member of the house of representatives John Katko wrote on Tuesday: “Because at stake are the lives of people, we can’t afford to break off negotiations on the aid package. The team of specialists on solution of problems is the proposal that both parties have agreed and which could bring negotiators to the negotiating table. I urge the President to reconsider this step.”
Later on Tuesday, the economic adviser to the White house Larry Kudlow in an interview tried to clarify the President’s words on Twitter, stating that in his opinion, trump said too on different positions of the parties in the negotiations, but is willing to compromise on individual target packages of care.
Market experts urged investors not to react sharply to the message of the President of the United States Twitter, as the format of the social network includes a short message, which can include to discern nuances and to be misunderstood. Therefore, investors making hasty decisions based on them, are at a high risk.
Nancy Pelosi on Tuesday suggested that such contradictory statements trump can be a result of the adoption by the President of the steroids (for treating coronavirus), which “can affect thinking.”
