Dow Rallies 164 Points as Virus Stimulus Package Hangs in the Balance
Democrats and Republicans appear to be making progress on a new stimulus bill, but Nancy Pelosi's price tag is far too high for GOP Senate Majority Leader Mitch McConnell. | Image: J. Scott Applewhite/Pool via REUTERS
- The Dow Jones Industrial Average rallied by triple digits Tuesday.
- Energy and materials companies were the stock market’s biggest gainers.
- Democrats and Republicans appear to be making progress on a new Covid-19 stimulus bill.
The Dow and broader U.S. stock market traded higher on Tuesday, though gains were limited by earnings headwinds and ongoing negotiations over a Covid-19 relief bill.
Dow, S&P 500, Nasdaq Rally
All of Wall Street’s major indexes finished in positive territory. The Dow Jones Industrial Average rose by as much as 146 points before paring gains. The blue-chip index was closed up 164.07 points, or 0.6%, at 26,828.47.
Shares of Dow Inc. (NYSE:DOW) and ExxonMobil Corp (NYSE:XOM) were the biggest gainers.
The broad S&P 500 Index of large-cap stocks rallied 0.4% to close at 3,306.51. Nine of 11 primary sectors reporting gains. Energy stocks rose 2.5% and the materials group climbed 1.3%.
After a rocky session, the Nasdaq Composite Index closed up 0.4% at 10,941.17, securing a new all-time high.
Markets were calm from the perspective of volatility, with the CBOE VIX hovering within a two-point range . The so-called “fear index” is trading slightly above the historical mean.
New Stimulus Deal in the Works
Markets are cautiously upbeat about the prospect of a new stimulus deal that would extend benefits to Americans affected by the lockdown. Democrats and Republicans are under pressure to finalize a deal after the $600 CARES unemployment benefit ended July 31 .
Although progress is being made, the two sides disagree on whether to slash the jobless supplement or provide aid directly to cash-strapped states. Several other funding issues are also being discussed.
Video: White House officials and Democrats are set to resume stimulus talks.
Congressional leaders are also at odds about the size of the stimulus package. House Speaker Nancy Pelosi told CNN that she wouldn’t budge from a $3.4 trillion price tag. Meanwhile, the proposed Senate GOP plan is roughly $1 trillion.
America’s response to Covid-19 has been sporadic, disorganized, and wrought with political dissent. Several states have rolled back or paused their reopening plans despite President Trump’s push to get the economy back on track .
The U.S. recorded 47,576 new virus cases on Tuesday, which is much lower than last month’s peak of nearly 75,000 in a single day.
The U.S. economy is coming off its worst quarter in modern history, with GDP contracting nearly 33% annually . Unemployment is also trending in the wrong direction, with jobless claims rising in back-to-back weeks.
