- US stocks surged on Wednesday on renewed hope for economic stimulus after President Donald Trump advocated for a piecemeal process of passing stimulus measures.
- The Dow Jones industrial average’s 1.9% increase was its biggest jump in 12 weeks.
- Potential individual stimulus measures that President Trump would like to see passed include direct payments of $1,200 to Americans and aid to the airline industry.
- Trump sent the stock market into a tailspin late Tuesday afternoon after he tweeted that he was calling negotiations off between Democrats and Republicans on another round of fiscal stimulus.
- Still, minutes from the Fed released on Wednesday showed that Fed officials worries a lack of further fiscal stimulus would threaten the economic recovery.
- Watch major indexes update live here.
US stocks surged on Wednesday on renewed hope of economic stimulus after President Donald Trump signaled that he is open to piecemeal stimulus, rather than a single trillion-dollar-plus package.
The willingness for individual stimulus measures comes after Trump torpedoed stimulus negotiations on Tuesday afternoon, tweeting that Democrat’s request for a $2.4 trillion stimulus package was too large and that they were not negotiating in good faith.
That tweet sent stocks lower Tuesday afternoon, reversing its daily gains, as investors soured on the idea of no stimulus being passed prior to the upcoming November election.
But Trump seemed to have reversed course Tuesday night, somewhat. He tweeted that he was open to signing legislation that would give Americans a direct payment of $1,200, in addition to providing aid to the airline industry.
Trump tweeted, “If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy?”
Here’s where US indexes stood at the 4 p.m. ET market close on Wednesday:
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Video: Economist on what the fight over more stimulus means for investors (CNBC)
More fiscal stimulus measures are essential to the economic recovery from the COVID-19 pandemic, according to Fed minutes released on Wednesday.
Fed officials said in their mid-September meeting that a lack of additional fiscal stimulus could threaten the economic rebound, and that they would debate the potential for additional bond buying measures at its next meeting.
Top Trump adviser Larry Kudlow said there’s not enough time to pass a “gigantic” stimulus bill with just 4 weeks until the election.
Analysts weighed in on the stimulus spat between Trump and Democrats. JPMorgan said that the US economy can survive with stimulus being delayed, as long as it is implemented by early 2021.
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Meanwhile, Morgan Stanley said the US economy can survive without new stimulus until after the election and avoid a double-dip recession.
House Democrat AOC disagrees with Wall Street analysts, saying that if Trump walks away from stimulus measures, the US economy would be “staring down the barrel” of one of the largest mass evictions in US history.
Gold gained as much as 1.1%, to $1,898.12 per ounce.
Oil traded lower. West Texas Intermediate crude fell as much as 3.4%, to $39.28 per barrel. Brent crude, oil’s international benchmark, fell 3%, to $41.36 per barrel, at intraday highs.
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