The New York Stock Exchange cut its gains on Tuesday night, only to finish slightly higher, still hanging on hopes of a bipartisan agreement on a new budget support plan in the United States before the November 3 election. Corporate results continued to rain and were on average higher than expected, particularly for Procter and Gamble (up 0.37%). IBM (-6.5%) on the other hand, it disappointed with flat accounts and a lack of short-term prospects. Alphabet, Google’s parent company, rose 1.3% despite the opening of an investigation for abuse of dominance against the internet giant.
At the close, the Dow Jones index gained 0.4% to 28,308 points (after -1.4% on Monday), while the broad index S-P 500 recovered 0.47% to 3,443 pts (-1.63% Monday), and that the Nasdaq Composite, technology and biotech stocks, advanced 0.33% to 11,516 pts (-1.65% on Monday). The three indexes had risen by more than 1% in the session, before reducing their gains in the last hour of listings. Ten of the 11 sector indexes in the S-P 500 rose, starting with energy (up 1.1%), financials (up 0.8%), communications services (up 0.8%) real estate (up 0.7%). The big “technos” turned green, including Amazon (up 0.3% after -2% on Monday), Facebook (up 2.3% after -1.7% on Monday), Apple (up 1.3% after -2.5% on Monday) and Microsoft (up 0.2% after -2.48% on Monday).
A support plan still possible before the November 3rd election?
On the political negotiations for a new stimulus package in the face of the coronavirus crisis, House Democratic Speaker Nancy Pelosi on Tuesday expressed her hope of reaching an agreement, saying the views are moving closer with the White House. Pelosi had set a deadline for Tuesday evening last weekend, believing that beyond that, Congress would not be able to vote on the bill before the November 3 presidential election, in two weeks to the day.
Observers still doubt the possibility of reaching an agreement within this time frame, but markets believe that whatever the timetable, a new stimulus package will sooner or later be adopted, given the risk of a relapse in economic growth in a context of health crisis still very worrying. Democrats, the majority in the House, have proposed a $2,200 billion plan, while the White House would be willing to accept an envelope of about $1,800 billion. Even if an agreement were reached, the fate of the plan is still uncertain in the Senate, where Republicans have a majority and have so far refused a large-scale “package,” merely proposing a minimalist plan of $500 billion. However, on Tuesday night, Senate President Mitch McConnell of The Senate indicated that if the White House agrees to a deal, he would agree to put the bill to a Senate vote. However, he did not specify when or give voting instructions to senators, who are divided on the issue.
Charles Evans (Fed) calls on the political class to act
The hesitations of the political class are regularly criticized by officials of the US Federal Reserve, which has implemented support measures on an unprecedented scale since March. On Tuesday, Chicago Fed President Charles Evans said fiscal and health policies are currently more important than more actions by the central bank. The current crisis “is a health and safety shock. It’s a matter of consumer and business confidence in their ability to keep going out to do their job,” Evans said. “We really need fiscal and health authorities to support and improve the economic environment,” the Fed official said at a meeting organized by the Detroit Economic Club. The Fed, which currently buys $120 billion a month in assets, could eventually decide to increase the amount of its purchases, but “additional government actions are more important,” he said.