The uncertainty about the relief measures puts the market on the edge. President Trump has noted that the $900 billion package isn’t suitable and has called for increasing direct payments from $600 to $2000.
On Wednesday, December 23, the market ended the trading session on a flat note. After gaining good momentum during the day, the S&P 500 lost steam in the final minutes. The policy uncertainty and the threat from Donald Trump to veto the stimulus has lowered the market sentiment.
The S&P 500 (INDEXSP: .INX) gained less than 0.1% closing at 3690 levels. Similarly, the Dow Jones Industrial Average (INDEXDJX: .DJI) ended in green with 0.38% gains closing at 30,129 levels. However, the tech-heavy Nasdaq (INDEXNASDAQ: .IXIC) closed in red with 12,771.11.
Cyclical stocks gained good momentum as investors poured money into these stocks on the backdrop of expected stimulus deals and falling jobless claims. As the world looks forward to recovering from the global health crisis, investors are moving their money to the companies that are likely to recover. Matthew Keator, the managing partner in the Keator Group, told Reuters:
“It’s a very welcoming sign to see rotation into beaten down sectors. It speaks to the importance to valuation and the importance of diversification. It also speaks to the hope that is out there,” Keator added. “When you see oil pick up and travel and tourism industries pick up, it speaks to the market looking forward and pricing in that hope.”
Energy and financial were the two best-performing sectors on Wednesday. Each of these groups jumped by 2.2% and 1.6% respectively.
President Donald Trump Threatens Veto Against the Stimulus
Last Sunday, December 20, Congress approved a $900 billion stimulus deal after months of negotiations. On Wednesday, President Donald Trump vetoed the bill calling it an “unsuitable disgrace”.
“Unfortunately, the Act fails to include critical national security measures, includes provisions that fail to respect our veterans and our military’s history, and contradicts efforts by my administration to put America first in our national security and foreign policy actions. It is a ‘gift’ to China and Russia,” he said.
— Donald J. Trump (@realDonaldTrump) December 23, 2020
Trump has asked Congress to increase direct payments from $600 to $2000. In a surprising call, House Speaker Nancy Pelosi has agreed to Trump’s call. She added that House Democrats will pass a standalone bill for unanimous consent by Thursday. Trump has requested Congress to send a “suitable bill or else the next administration will have to deliver a Covid relief package”. Art Hogan, chief market strategist at National Securities told CNBC said:
“It feels like the market is following the rule of ‘watch what he does, not what he says’ in terms of the President’s late night drive-by shooting of the Covid aid package. Odds are there is enough time to tweak the relief legislation enough to get it passed and signed.”
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