It appears that the teaser from President Donald Trump's press conference last night about the steps that the U.S. government might take to soften the economic blow of a more severe response from the COVID-19 outbreak in the U.S. has had the desired effect. At least it looks that way, given how the stock market opened regular trading hours.
Whether or not the President is able to come through with a plan (and that's actually more of an open question than it should be), the promise of a plan was enough to keep the markets from falling over a cliff on Tuesday. The major indices are trading up as we write to you:
- DJIA: +773.43 points, +3.26%
- S&P 500: +81.11 points, +2.95%
- Nasdaq: +222.38, +2.80%
SaaS shares are also higher, trading up over 1.5%. Yesterday they fell into bear-market territory.
Panic set in yesterday because of the spread of COVID19, rising concerns about trade and economic growth -- the effects were felt in the sliding price of oil, treasuries, and crypto. Now it remains to be seen what the shape will be of the President's proposed stimulus package and where the government will put its emphasis. (And, then, what the market thinks about the collection of pledged government support.)
There are a few shapes this could take -- big business bailouts that provide ballast to unsteady industries like travel tourism and services and a payroll tax cut to keep more money in the pockets of cash-strapped middle class workers. The problem with a payroll tax cut is that it further starves the government of cash, the benefit is that the payroll tax is one that arguably hits working class folks far harder than it does people whose income isn't primarily reliant on wages.
Of course, deficits have not been a concern of the current administration to-date.
Regardless, stocks are up, cryptos are up, and things are building back a bit from yesterday's heady mess. Enjoy the good news as it's a welcome respite from the last 24 hours.