Dow Jones Industrial Average futures suggested that the US stock market would open to slight gains on Wednesday after President Donald Trump delivered a White House address on border security and the importance of including border wall funding in any spending bill that ends the partial government shutdown.
As of 8:25 am ET, Dow futures implied a rise of 116 points or 0.49 percent at the open, which would lift the index to 23,859. Nasdaq and S&P 500 futures were also pointing north, with the former up 0.51 percent and the latter preparing to climb 0.41 percent at the opening bell.
On Tuesday, all three major US stock market indices had closed with gains of around one percent, with the Dow rising 256.1 points or 1.09 percent to 23,787.45, the Nasdaq climbing 1.08 percent, and the S&P 500 lagging a bit with a 0.97 percent gain.
Wednesday’s move to the upside came less than 12 hours after President Donald Trump addressed the nation on Tuesday night from the Oval Office, using stark language to convey the situation on the US-Mexico border as a “humanitarian crisis – a crisis of the heart and a crisis of the soul.”
Crucially, though, the president did not follow through on his threat to declare the border a national emergency, which might — pending a bitter fight in the courts — have afforded him with the latitude to follow through on his promise to build a physical barrier on the border, even without buy-in from congressional Democrats.
That said, Axios reported that a source close to President Trump said that declaring a national emergency at the border is the “most likely ultimate option” to realize his beloved wall’s construction.
House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) delivered the expected response just minutes after the president’s address, calling on Trump to “end this shutdown now.” However, their speech will likely be remembered more for the memes it inspired than the words it contained — or its impact on the legislative process.
In other words, both sides have doubled down on their positions in what few believe is anything other than a symbolic fight. Meanwhile, the partial government shutdown has entered its 19th day, and some federal employees are days away from missing their first full paycheck.
Now, “Big Three” rating agency Fitch is warning that the government shutdown, if it persists much longer, could threaten the United States’ “AAA” credit rating. Speaking in London in remarks quoted in Business Insider, James McCormack, the firm’s global head of sovereign ratings, said:
“If this shutdown continues to March 1 and the debt ceiling becomes a problem several months later, we may need to start thinking about the policy framework, the inability to pass a budget … And whether all of that is consistent with triple-A.”
Across the Pacific, improving relations with China are buttressing the markets, as the world’s two largest economies have today concluded three days of mid-level trade negotiations. While a formal end to the ongoing trade war has not yet been announced, reports out of China suggested that the discussions were going well. Hu Xijin, an editor at the Global Times, tweeted that the two sides are expected to release statements on Thursday morning Beijing time.
However, with the Dow preparing to rise for a fourth consecutive day — its longest winning streak since November — one must hope that the markets are not pricing in a US-China trade deal too quickly. Trump, who tweeted on Wednesday that negotiations were “going very well,” has overstated the quality of the talks before. If the week passes without the outlines of a deal, global indices could slide back into the red.
Featured Image from Shutterstock. Price Charts from TradingView.
Last modified: September 23, 2020 12:17 PM