Stocks Wobble As US Stimulus Is Voted Down

Major US indices took another tumble yesterday after a relief package to counter the economic damage from the coronavirus was voted down in the US Senate.

The $500bn package – already scaled back from previously proposed versions – would have provided $250 billion for another round of Paycheck Protection Program loans, just under $50 billion for COVID-19 testing and vaccine development, and over $100 billion for schools. It also would have forgiven a $10 billion loan to the United States Postal Service and boosted weekly enhanced unemployment benefits by $300.

However, the stimulus package received just 52 votes in favor, all from Republicans, versus 47 opposed votes from Democratic Senators and Kentucky Republican Rand Paul. The bill needed 60 votes in favor to move forward.

In reaction, tech stocks resumed their slide once more yesterday, but it was energy companies that faced the toughest day. Of the 11 sectors in the S&P 500 index, energy names fell hardest with a 3.7% loss, versus 2.3% for information technology stocks and 1.8% for consumer discretionary.

This morning US futures are signaling that markets will pare some of these losses with the Dow Jones up 0.6%, the S&P up 1%, and the tech-heavy Nasdaq up 1.6%.

A plunge in the price of oil and its impact on the energy sector has been largely overshadowed by volatility among the tech giants over the past week, but the impact has been significant. The energy sector has fallen in seven of the past eight trading sessions, and hydrocarbon exploration names such as Apache and Occidental are down by 20% to 30% over the past month and double digits over the past week. Those moves have been spurred by the price of oil sinking to sub-$40 a barrel for the first time in months, driven by a faltering demand recovery and by global cartel OPEC beginning to ramp up production. Saudi Arabia cutting the official price at which it sells oil to Asia and the US early in the week added fuel to the fire.

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William K. 2 months ago Member's comment

Interesting! And of course the stocks prices would be impacted by various parts of the money-spray that didn't happen. And of course the package contained enough different give-aways to offend almost everybody. When will our legislators learn to aim with a laser instead of a fire hose?

And the crazy senator must have personal investments in the funny money business to be advocating the second currency game. Untracable cash flow is exactly what the cyber criminals need, and it will benefit other criminal enterprises as well.