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Thursday, August 5, 2021
Stocks & Shares

Stocks rise as investors wave away Trump’s stimulus threat

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The Dow Jones Industrial Average gained 0.38%, and the S&P 500 advanced 0.07%

Stocks rose on Wednesday as investors waved away a threat by U.S. President Donald Trump not to sign a bill including nearly $900 billion in pandemic relief, while the British pound soared on rising expectations of a Brexit trade deal.

In a video posted on Twitter, Trump said the stimulus package, agreed upon after months of wrangling in Congress, was “a disgrace” and that he wanted to increase “ridiculously low” $600 payments for individuals to $2,000.

The benchmark S&P 500 U.S. stock index nonetheless advanced as cyclical sectors such as energy and financials, expected to benefit most from an economic recovery, led in percentage gains.

Market analysts said they still believed fiscal stimulus would come soon, whether under Trump, a Republican, or President-elect Joe Biden, a Democrat. Some investors could be holding out hope for even more aid given Trump’s remarks, said Phil Orlando, chief equity market strategist at Federated Hermes.

The Street must be thinking, ‘Alright, we’ll get a bigger stimulus,’ he said. Republicans have the president’s cover to sit down and negotiate a bigger deal.

On Wall Street, the Dow Jones Industrial Average rose 114.32 points, or 0.38%, to 30,129.83, the S&P 500 gained 2.75 points, or 0.07%, to 3,690.01 and the Nasdaq Composite dropped 36.80 points, or 0.29%, to 12,771.11.

Foreign exchange markets broadly reflected optimism toward U.S. fiscal stimulus and global growth. The euro rose 0.24% to $1.2191, while the Australian dollar, considered a riskier currency, advanced 0.8% to $0.758.

Conversely, the dollar index, which measures the safe-haven currency’s performance against a basket of other major currencies, fell 0.14%. The dollar index has weakened more than 6% this year as investors bet the U.S. Federal Reserve will keep its monetary policy ultra-accommodative.

With a Brexit trade deal seeming likely, “investors are looking once again to recovery,” said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions. It was being held up by the trade dynamic between Britain and the EU.

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