Dow Plunges as Coronavirus Stimulus Bill Again Fails to Clear Congress
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Another day, another volatile trading session on Wall Street.
Major benchmark indexes, which spent the morning seesawing on the heels of the Federal Reserve’s announcement that it would pledge asset purchases with no limit, closed the day in the red. The Dow Jones Industrial Average was down nearly 600 points, or more than 3%, while the S&P 500 dropped 68 points, or 3%, and the Nasdaq Composite fell 19 points, or 0.3%.
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The tepid end to the day came shortly after U.S. lawmakers failed to pass a massive economic stimulus package that proponents say is aimed at diminishing the economic blow from the coronavirus, which has killed at least 500 people and sickened more than 41,200 across the country. It marked the second time in under a day that the GOP-backed legislation was successfully blocked by House Democrats.
The roughly $1.6 trillion relief measure — dubbed “phase three” in a series of bills aimed to support the U.S. economy — would have authorized hundreds of billions of dollars for some of the country’s largest companies and provided aid for unemployed workers. Critics, however, have said that the bill, in its current state, does not adequately protect workers and is imprecise on corporate bailout rules. Negotiations continue between both parties, and a Senate vote could still occur late today.
On Sunday, lawmakers were stalled on a version of the legislation that would have allocated $350 billion for small business loans that could be forgiven if they were used to keep workers employed, as well as a direct payment of $1,200 per person (and $500 per child), depending on income levels. It would also expand unemployment benefits, providing 39 weeks of assistance versus the 26 weeks currently offered by most states.
Early today, the Federal Reserve took additional measures to boost the economy: It announced a major expansion of lending programs, including purchasing commercial mortgage-backed securities issued by government-supported entities as well as not limiting the purchase of Treasury and mortgage securities that it approved one week ago.
“While great uncertainty remains, it has become clear that our economy will face severe disruptions,” the central bank said. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes, and to promote a swift recovery once the disruptions abate.”
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