Markets climbed 5% or more overnight on hopes of a possible fiscal stimulus package amidst the coronavirus panic, but then quickly relinquished most of those gains in the regular trading session Tuesdays, to trade back near Monday’s lows.
The Dow Jones Industrial Average traded over 1000 points higher in the overnight session before falling bacl towards the lows and is currently up just slightly from Monday’s close. The S&P 500 was up 1.5% after popping 3.7%, but is also trading near yesterday’s close and lows as well. The Nasdaq Composite has shown similar moves, up less than 1% after a robust move higher overnight.
Stock Index ETF echoed the moves in markets, with the SPDR S&P 500 ETF Trust (SPY), the SPDR Dow Jones Industrial Average ETF (DIA), and the Invesco QQQ Trust (QQQ) attempting to stay green as of 2P.M. EST.
President Donald Trump consider the idea of “a payroll tax cut or relief” on Monday to overcome economic fallout from the coronavirus. The potential tax incentives would be in addition to an $8.3 billion spending package Trump signed last week.
“While we believe that a fiscal stimulus package will be produced, the timing and scope remain uncertain,” said Ed Mills, Washington policy analyst at Raymond James, in a note. “When asked about the potential for a fiscal package, some Republican leaders on the Hill signaled that they believe these actions to be premature and key Congressional Democrats arguing that there are more immediate priorities over tax cuts and plan to introduce their own package in coming days.”
Markets plummeted Sunday night and Monday, with the crude oil falling more than $12 a barrel, and futures markets locking limit down.
The deep stock drop placed the historic bull market in jeopardy, as the S&P 500 was 19% below its intraday all-time high of 3,393.52 from Feb.19 at Monday’s close. The benchmark would fall into bear market territory if it slumps 20% from its peak or more, which it already has based on overnight trading Monday.