The S&P 500 rose 1.3%, while the Dow Jones Industrial Average gained 1.5%
Stocks are recovering on Wall Street Wednesday after President Donald Trump appeared to backtrack on his decision to halt talks on another rescue effort for the economy.
The S&P 500 was 1.3% higher in late morning trading after Trump sent a series of tweets late Tuesday saying he’s open to sending out $1,200 payments to Americans, as well as limited programs to prop up the airline industry and small businesses.
The tweets came just hours after Trump sent the market into a sudden tailspin with his declaration that his representatives should halt talks with Democrats on a stimulus effort for the economy until after the election, saying House Speaker Nancy Pelosi had been negotiating in bad faith. The stakes are high, as economists, investors and the chair of the Federal Reserve all say the economy needs another dose of support following the expiration of weekly jobless benefits and other stimulus Congress approved earlier this year.
The Dow Jones Industrial Average was up 429 points, or 1.5%, at 28,202.
The Nasdaq composite climbed 1.4%, despite a call by Democratic lawmakers for Congress to rein in the Big Tech companies that dominate it and other indexes. The proposal, which follows a 15-month investigation by a House Judiciary Committee panel, could make it harder for Amazon, Apple, Facebook and Google’s parent company to acquire others and impose new rules to safeguard competition.
Amazon rose 1.5%, and Apple climbed 1.4%. Google’s parent company fell 0.4%, and Facebook lost 0.5%.
But much of the market’s attention remains fixed on the prospects for more stimulus for the economy from Washington. Wednesday morning’s gains helped the S&P 500 recoup almost all of its loss from the day before, when Trump’s tweets suddenly sent it from a 0.7% gain to a 1.4% loss.
Just a few hours before Trump made his announcement on Tuesday to halt negotiations, Federal Reserve Chair Jerome Powell had asked Congress to come through with more aid. He said that too little support “would lead to a weak recovery, creating unnecessary hardship.”
Some analysts characterized Trump’s move as likely a negotiating ploy.
I do not believe hopes of a stimulus deal are now gone forever, said Jeffrey Halley of trading and research firm Oanda. One of Mr. Trump’s favourite negotiating tactics, judging by past actions, is to walk away from the negotiating table abruptly. The intention being to frighten the other side into concessions.
In the longer term, many investors say a big stimulus package may still be possible regardless of what Trump says. A Democratic sweep of the upcoming elections would likely clear the way for a big government program after the transfer of power.
Airlines jumped to some of the day’s bigger gains after Trump singled out the industry, asking Congress to “immediately” approve $25 billion for them. Last week, Pelosi had told airline executives to halt the furloughs of tens of thousands of workers with the promise that aid for them was imminent, though a proposal by House Democrats to give the airline industry $28.8 billion failed to advance.
United Airlines Holdings rose 3.4%, American Airlines Group climbed 3.5% and Delta Air Lines pulled 2.6% higher.
The S&P 500 rose broadly, with technology and health care stocks making the biggest gains. Other areas that would benefit most from a strengthening economy were also climbing, including retailers and travel-related companies.
The market’s just been relentlessly led by long-duration growth stocks, said Barry Bannister, head of institutional equity strategy at Stifel. The big question is, are we going to see some signs of a shift to economic growth beneficiaries.
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