U.S. markets and stock exchange traded funds on Tuesday regained some lost ground from a record sell-off in the previous session as investors looked for further stimulus measures to prop up a slowing economic outlook.
On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) increased 2.3%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 1.4%, and SPDR S&P 500 ETF (NYSEArca: SPY) gained 1.7%.
Bolstering risk assets on Tuesday, White House officials plan to meet with lawmakers to discuss potential measures to mitigate the anticipated slowdown in economic activity due to the coronavirus outbreak, such as a payroll-tax cut and help for hourly wage earners, the Wall Street Journal reports.
The Trump administration may even be discussing a 90-day payroll tax suspension.
“The primary action of a payroll tax cut will be to improve investor confidence in the short term,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, told Reuters. “As long as people are able to hang on to their jobs, the payroll tax cuts will be quite supportive.”
Stimulus Strength
Countries around the world are also looking into stimulus packages to strengthen their economies. For example, Japan’s government revealed a multibillion-dollar plan to support companies affected by the coronavirus.
However, analysts warned it might not be enough to ease investor fears, especially with health officials projecting the number of coronavirus cases will keep rising around the world.
“The markets at the moment are very volatile, very broken,” Sergey Dergachev, a portfolio manager at Union Investment, told the WSJ. “The market participants are very nervous, so every headline or signal provided by central banks and politicians and Trump provides some small relief.”
Meanwhile, the relief rebound was led by areas that were among the hardest hit in the prior weeks, including airline stocks and energy companies, which included some rising so quickly in the early morning that they triggered single-stock circuit breakers to halt trading.
For more information on the markets, visit our current affairs category.
