US stocks rebounded Wednesday after President Donald Trump partially reversed his decision to end talks on a fiscal package and called for stimulus payments.
Wall Street’s main indices had fallen sharply on Tuesday after Trump abruptly halted talks with Democrats on another stimulus package as the US economic recovery loses steam.
The move came only hours after Federal Reserve Chair Jay Powell urged lawmakers to pass measures to boost the economy after it was hit hard by coronavirus shutdowns.
But late Tuesday, Trump called for Congress to “immediately” pass legislation to extend aid for airline workers and small businesses. Trump also said he would back another round of $1,200 stimulus payments for workers.
Wall Street stocks rose Wednesday as investors saw better chances for some kind of relief following Trump’s latest comments.
In late morning trade, the Dow was up by 1.6 percent.
“Stimulus chatter is clearly lighting the stock market’s way. That is the takeaway from yesterday’s knee-jerk selling and this morning’s knee-jerk rebound,” said market analyst Patrick J. O’Hare at Briefing.com.
A senior aide said Wednesday that Trump would back piecemeal fiscal relief measures to boost hard-hit industries, but did not think a broad-based package is achievable before the election.
“At the moment it’s a lot of hot air, and may be setting up the markets for disappointment down the line,” said Connor Campbell at Spreadex
“Nevertheless, US investors seem to be buying Trump’s pronouncements.”
European indices were harder to convince however.
Frankfurt eked out a gain, but both London and Paris dipped.
The dollar was mixed against other major currencies, and oil prices dropped once again.
Financial markets also focused on the pound as negotiations between the EU and Britain on their post-Brexit relationship resume in London on Wednesday.
Chris Beauchamp, chief market analyst at IG, said the hard line Britain was taking in the talks with warnings it could walk away from the negotiations was unsettling the pound.
British negotiatiors might believe they have finally gained “a psychological ascendancy over the EU side, but it is a dangerous game to play, with markets likely to take a disorderly exit in a very unpleasant frame of mind,” he said.
London – FTSE 100: DOWN less than 0.1 percent at 5,946.25 points (close)
Frankfurt – DAX 30: UP 0.2 percent at 12,928.57 (close)
Paris – CAC 40: DOWN 0.3 percent at 4,882.0 (close)
EURO STOXX 50: DOWN 0.1 percent at 3,229.32
New York – Dow Jones: UP 1.6 percent at 28,211.65
Tokyo – Nikkei 225: DOWN 0.1 percent at 23,422.82 (close)
Hong Kong – Hang Seng: UP 1.1 percent at 24,242.86 (close)
Shanghai – Composite: Closed for a holiday
Euro/dollar: UP at $1.1766 from $1.1733 at 2100 GMT
Pound/dollar: UP at $1.2918 from $1.2868
Dollar/yen: UP at 105.97 yen from 105.60 yen
Euro/pound: DOWN at 91.09 pence from 91.14 pence
West Texas Intermediate: DOWN 2.9 percent at $39.48 per barrel
Brent North Sea crude: DOWN 2.6 percent at $41.53 per barrel