Despite the US kickstarting the distribution of the Pfizer/BioNTech COVID-19 vaccine, the lawmakers are working on one more stimulus round to keep the economic activity on track.
On Tuesday, December 15, the US stock markets remained upbeat on hopes of Congress passing another stimulus package. The Dow Jones Industrial Average (INDEXDJX: .DJI) jumped over 300 points advancing 1.1% to 30,199 levels.
Similarly, the S&P 500 (INDEXSP: .INX) also surged over 1% and closing in positive at 3,694.62, after a four-day losing streak. Also, the Nasdaq Composite (INDEXNASDAQ: .IXIC) jumped 1.5% to 12,595.06, hitting a new record-high closing. Along with the stimulus news, the news about the COVID-19 vaccine from Moderna Inc (NASDAQ: MRNA) added more fuel to the market.
Apple was leading the rally for tech stocks with the AAPL stock surging 5% higher. On Tuesday, Apple Inc (NASDAQ: AAPL) stock closed at $127 levels after reports emerged that the company is increasing iPhone production during the first half of 2021.
Talks for another round of economic stimulus started as House Speaker Nancy Pelosi had set up the meeting with other Senate members. The lawmakers also decided to split up the previous proposal into two parts.
The first part includes $748 billion spendings on small business loans, education, vaccine distribution, unemployment aid, and rental insurance. The second part has a $160 billion bill for financial aid to local and state governments and business liability protection. Art Hogan, chief market strategist at National Securities said:
“There’s been a tug of war between the vaccine news and the virus news. The only tiebreaker that’s kept the averages on their way higher seems to be the potential for getting stimulus out of gridlock. It certainly feels like one of the proposals that’s on the table … can go through.”
Bleak Near-Term Outlook for the US Economy Ahead of New Stimulus Measures
While several analysts have hinted at a faster recovery of economic activity in 2021 owing to the end of the pandemic, the near-term outlook remains bleak at this point. Although the US has started rolling out the Pfizer/BioNTech vaccine from Monday, the total COVID-19 deaths in the country also crossed 300,000.
New York City Mayor Bill de Blasio has issued a warning that the city’s hospitals are overwhelmed at this stage. Thus, they might resort to a full shutdown. Moreover, the upcoming Christmas season could call for stricter social distancing measures. Before the vaccine distribution goes full-scale, economists are calling for another stimulus to keep the economic activity on track. Luke Tilley, chief economist at Wilmington Trust said:
“With the continued rising cases and mass vaccinations still a ways out, we could see some further weakness in jobs and even a flattening where we’re not even adding jobs at all … that’s absolutely a possibility for this next jobs report. And if we were to not get another stimulus package, you’re going to have 10 to 11 million people fall off the unemployment rolls right away, and that would hit spending as well.”
On Tuesday, the USFDA also said that data from Moderna’s COVID-19 vaccine also meets expectations for emergency use. If the FDA approves it, this will be the second vaccine coming out of the US this year.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
