With what seems to be the Christmas rally in full effect, stocks and index ETFs rallied back from the prior losing session on Wednesday, despite criticism from President Trump over the new coronavirus relief package, which could potentially postpone the delivery of funds to hurting Americans.
The Dow Jones Industrial Average climbed 0.82%, while the S&P 500 added 0.56%, to trade back above 3700, and was looking to break a three-day red streak. Meanwhile, the Nasdaq Composite was essentially unchanged due to a mixed back of tech heavyweights like Amazon, Apple, and Microsoft.
Major stock ETFs are also rallying on Wednesday as well amid the news. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are all advancing just before 1 PM EST.
Although he did not threaten to veto the legislation, on Tuesday, President Trump called the new $900 billion Covid relief package a “disgrace” and claimed lawmakers needed to change the bill’s to augment direct payments to $2,000 from $600. House Speaker Nancy Pelosi was in accord with Trump’s request for larger payouts, stating that House Democrats will continue to work, aiming to pass a standalone bill by unanimous consent Thursday.
“President Trump’s demand for revisions to the COVID relief bill to raise the individual payment amount to $2,000 significantly raises uncertainty for the days ahead, but our base case remains that the bill passed by Congress will become law,” wrote Ed Mills of Raymond James overnight. “The bill becomes law on Jan. 3 without any action taken by the President – although a government shutdown occurs if the bill is not signed by Dec. 28.”
Congress had been working on the rescue bill for months before passing it this week. The package includes additional jobless benefits, small business loans, direct payments of $600, and money to disseminate for coronavirus vaccines and other provisions.
“It feels like the market is following the rule of ‘watch what he does, not what he says’ in terms of the President’s late-night drive-by shooting of the Covid aid package,” said Art Hogan, chief market strategist at National Securities. “Odds are there is enough time to tweak the relief legislation enough to get it passed and signed.”
With vaccines already being disseminated to frontline healthcare workers, on Wednesday, Pfizer and BioNTech announced a second deal with the U.S. government to offer an additional 100 million doses of their jointly-developed coronavirus vaccine, which takes the total tally of doses to 200 million. The vaccine doses will be delivered to the U.S. by the end of July next year.
Despite coming off of its third straight day of losses, the S&P 500 is still up over 14% with only six trading days left in the year, as investors appear to be jumping back in for the final days of 2020, following what may have been some profit-taking over the last few days.
“We may have already gotten a little bit of a Santa Claus rally,” David Waddell, chief investment strategist at wealth advisory firm Waddell and Associates, said recently. “So normally the markets would accelerate from here into year-end, and they may again, but the run has been such a strong one, I wouldn’t be surprised, and actually I’d rather, if the market consolidated its gains a little bit.”
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