US Stocks Close Mixed Following Dovish Remarks by Powell
17 Dec 2020 · 3rd Party Analysis
- A more positive economic outlook for 2021
- The number of Coronavirus victims continues to soar
The US market saw modest gains on Wednesday and the dollar extended its decline following a dovish commentary by Fed Chairman Jerome Powell Wednesday afternoon during the US trading hours. The Dow Jones Industrial Average closed lower by 0.15% or 44.77 points. The S&P 500 ended the session positive by 0.18%, or 6.55. And the tech-heavy Nasdaq Composite closed higher by 0.50%, or 63.13.
On Wednesday during the US session, Federal Reserve Chairman Jerome Powell held the last Fed meeting for the year. Fed’s Powell announced the Fed continues to be deeply committed to supporting the US economy. They will do so by maintaining the course of the substantial asset purchase program until the economic conditions improve and significant progress can be seen. Mr. Powell also highlighted the importance of fiscal stimulus as the pandemic continues to ravage the country.
To aid the recovery process, the Federal Open Market Committee confirmed it would keep buying $120bn of debt per month as an attempt to balance price stability and high levels of employment. Mr. Powell and the Fed are not overly optimistic for the coronavirus-battered economy in the short-term, but looking ahead into 2021, and more precisely the second half, “the economy should be performing strongly”, Chairman Powell commented.
Positive Prognosis for 2021
The prognosis for next year looks better as the US economy is expected to continue the recovery process now that mass vaccination is taking place across the states. The short-term outlook, however, is still uncertain and gloomy as the developments on the stimulus package are not yet finalized and the economic recovery is faltering amid surging Covid-19 cases. Additionally, more and more Americans are using up their checking accounts as US lawmakers drag on the stimulus talks.
Stimulus Deadlock Set to Be Resolved
Presently, after months of stimulus deadlock, US congressional leaders inch closer to a stimulus bill. It is worth $900bn and includes direct payments to US citizens. On Wednesday, the US lawmakers represented by Nancy Pelosi, the Democratic Speaker of the House, and Mitch McConnell, the Republican Senate majority leader, made good progress towards an agreement on an aid package. Initially, the two sides were united for a package worth $748bn. This amount included funds for unemployment and small businesses. However, there was enough support in Congress to raise the price tag to $900bn. On the topic, Chairman Powell commented that reaching a deal on the stimulus bill would be “very good” for the US economy.
Extended Unemployment Discussed
In March, when the first round of stimulus was disbursed, most adult Americans received up to $1,200 in direct payments coming from a relief package worth $2.2tn. Currently, it is not yet certain how much exactly will be devoted to unemployment benefits. Some lawmakers have suggested that the same amount, if not more, is directed to Americans. John Thune, a Republican, said among the discussed funding options, negotiators were also looking at $600 to $700. This would be considered as extended unemployment benefits per individual.
Hopes for a Bill Before the Holidays
And lawmakers are rushing to approve a bill before the holiday break. While the coronavirus claimed over 3,800 victims on Wednesday in the US, a record number for the country. A person has shown symptoms of an allergy, flushing, and shortness of breath 10 minutes after receiving the vaccine. Therefore two states had to temporarily hold the delivery of 3,900 shots of the Pfizer-BioNTech vaccine. As a result, Pfizer will ship roughly 900,000 doses less next week compared to this week.