Financial market surged Tuesday after several of the worst trading days on record. The rebound is a hopeful response by investors who show optimism regarding the fiscal stimulus measures which were debated in congress over the weekend. As of Tuesday morning, the S&P 500, Nasdaq and Dow Jones Industrial Average rallied more than 5% and hit their upper trading limits.
Near future concerns are still very much prevalent. The COVID 19 continues to infect more people as the global number of confirmed cases is now over 350,000. “With the Fed now all-in and then some, the onus will be largely on fiscal policy to provide any further support for consumers and businesses,” Ben Ayers, senior economist for Nationwide, said in an email Monday according to Yahoo Finance. “Early signals suggest widespread layoffs and cutbacks by businesses with the sudden economic stop seen across the globe, necessitating further action to cushion the harm to the economy.”
The hopes that the stimulus package will be implemented outweigh the concerns for now. The stimulus expected to be passed in hopes of combating the likely economic fallout from the Coronavirus (COVID 19) pandemic. Late Monday, House Speaker Nancy Pelosi unveiled a $2.5 trillion rescue package, and signaled optimism on Tuesday that the two parties are getting closer to signing on the deal.
As part of the negotiations, Secretary of the Treasury Mnuchin signaled agreement to an inspector general and an oversight committee for a $500 billion fund that Republicans have proposed specifically to help distressed businesses. The Democrats had previously criticized the fund for leaving too much choice in the hands of Mnuchin.
Activist investor Bill Ackman decided to show his optimism as he reportedly has made a “recovery bet” on the economy, investing $2.5 billion in equities, according to Bloomberg. Ackman also upped his positions in several of his portfolio companies and reinvesting in others like Starbucks Corp. “I built a lot of confidence over the last week that the president and his team are heading in the right direction,” Ackman said.