What’s happening: US stocks surged to new highs on Monday after President Donald Trump announced the signing of the covid-19 relief bill.
What happened: The signing came only days after Trump rocked the markets by rejecting the $2.3 trillion bill, which included direct payment cheques of $600 to each American.
Wall Street stocks climbed on hopes of the new fiscal spending boosting demand and supporting small businesses to trigger economic growth after the coronavirus crisis.
Why it matters: After several months of negotiations, the $900 billion covid-19 relief bill was signed into a law by Trump to extend jobless benefits to millions of Americans. The passing of the bill also averted a government shutdown.
Last week Trump had vehemently vetoed the bill, asking for the direct payment cheques to be raised to $2,000 per individual. The House of Representatives voted late last evening to increase the relief cheques to $2,000, which has now been sent to the Senate for approval.
Monday’s stock market performance added to Wall Street’s strong year-to-date rally, with the S&P 500 gaining 15.6% and the Dow Jones index up by 6.5%. With investors favouring technology stocks amid stay-home orders, the Nasdaq 100 has added 43.8% year to date.
Investors have so far shrugged off the continued rise in covid-19 cases, even as the US recorded an average of around 200,000 new daily cases last week, taking the total count past 19 million with over 340,000 deaths. Markets were unmoved by Dr. Anthony Fauci’s warning of the country witnessing another surge in fresh cases following the Christmas and New Year holidays.
The US has already started distributing covid-19 vaccines developed by Pfizer and Moderna, with 2.13 million doses already being administered as of December 28, according to the CDC.
The Dow Jones index jumped 204.10 points to settle at 30,403.97 on Monday. The S&P 500 closed the session at 3,735.36, adding 0.87% and surpassing its previous record high hit earlier this month. The Nasdaq 100 spiked 0.74% to 12,899.42.
What to watch: Markets will keep a close eye on the Senate’s decision on the direct payment of $2,000. US stock futures traded higher in the Asian session this morning, suggesting a higher open on Wall Street today.
Investors awaiting the S&P CoreLogic Case-Shiller 20-city home price index, which is expected to rise 6.9% in October, following a 6.6% increase in the previous month.