Stock futures flat after Trump calls Covid stimulus bill unsuitable
U.S. stock futures stood little changed in early morning trading on Wednesday, largely recovering from earlier declines after President Donald Trump expressed concerns about the new Covid-19 relief package which could delay the deployment of funds to struggling Americans.
Dow futures were 5 points higher. S&P 500 futures and Nasdaq 100 futures were also little changed.
Late on Tuesday, Trump called the new $900 billion Covid relief bill an unsuitable “disgrace” and admonished lawmakers to alter the bill’s contents, especially the amount allocated for direct payments to Americans. Trump did not threaten to veto to legislation but he asked to be sent a “suitable bill or else the next administration will have to deliver a Covid relief package.”
On Tuesday, the Dow Jones Industrial Average shed 200 points, despite a 2.9% jump in Apple’s stock. The S&P 500 slipped 0.2% for its third day of losses. Travel-related stocks came under pressure amid lingering concerns about the new coronavirus strain from the U.K.
Equities slipped despite Congress passing a bill with $900 billion in pandemic aid after months long negations. To be sure, investors could be profit taking after robust stock returns in 2020 as year end approaches.
The package includes additional jobless benefits, more small business loans, direct payments of $600 and funds to distribute Covid-19 vaccines, among other provisions. President Donald Trump is expected to sign the bill into law in the coming days.
The “stock market action further reinforces the old adage ‘buy on the rumor (of another stimulus package) and sell on the news,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “Over the last couple days, stocks have been pretty disappointing given yet another $900 billion of fiscal relief. Despite more fiscal help, leadership in the S&P 500 reverted to technology and away from cyclicality.”
The Nasdaq Composite was the outperformer on Tuesday, closing up 0.5% at a new record as Amazon, Apple and Microsoft all closed higher. Stationary bike company Peloton popped 11%.
The small-cap benchmark Russell 2000 rose 0.99% to a close at a record. Small caps are up 105.94%, more than doubling off their March lows.
“The big winner, however, were small cap stocks which seem to rise lately with or without the prospects of additional stimulus,” added Paulsen. “Cyclicals and particularly international stocks were pounded today by a significant recovery in the U.S. dollar reversing some of its recent weakness.”
Despite the newly passed fiscal support, millions of Americas are still struggling to find work as the pandemic roiled the labor force.
Last week’s jobless claims numbers come out on Wednesday at 8:30 a.m. ET. Economists polled by Dow Jones are expected 888,000 Americans filed for unemployment last week, more than the previous week’s 885,000.
The U.S. is reporting at least 215,400 new Covid-19 cases and at least 2,600 virus-related deaths each day, based on a seven-day average calculated by CNBC using Johns Hopkins University data.
By Maggie Fitzgerald