Stock futures pointed toward a slightly higher open Tuesday morning after lawmakers voted to approve a long-awaited virus relief package, offering funds to help support many of the individuals and businesses hardest-hit by the coronavirus pandemic.
Contracts on all three major indices were slightly higher, reversing some losses from earlier during the overnight session.
A day earlier, the Dow had shed more than 400 points, or 1.4%, before recovering losses to end slightly higher during a volatile session. Concerns over a new strain of the coronavirus identified in the UK, and a host of new travel restrictions to and from the region that ensued, were at the center of investor jitters.
However, with much still to be uncovered about the virulence of the coronavirus variant, investors at least temporarily turned their attention to Washington. Congress passed a 5,593-page coronavirus relief bill and government spending bill for the fiscal year, after reaching an agreement on the legislation over the weekend.
The virus relief package is set to include another round of $600 stimulus checks to Americans, $300 per week in augmented federal unemployment insurance for unemployed individuals, more than $300 billion in aid for small businesses including through the Paycheck Protection Program, and tens of billions of dollars across other provisions including rental assistance, vaccine distribution funds and broadband support.
“The biggest single component of the new COVID relief bill is the re-funding of the Paycheck Protection Program, with a total of $284 billion,” Ian Shepherdson of Pantheon Macroeconomics said in a note Monday evening. “It worked – and will work again – by offering loans to small businesses based on the size of their payrolls.”
“With services jobs now in free fall, according to the alarming daily data from Homebase, this can’t come a second too soon, though in reality firms likely won’t be able to make applications under the new program for another couple weeks,” he added. “Still, this is a big step forward, helping bridge the gap between the third wave-ravaged services economy and the post-pandemic world of the spring.”
All told, the package came in at about $900 billion, or less than half the size of the $2.2 trillion CARES Act from the spring. Democratic lawmakers have suggested the bill is just the start of a more comprehensive suite of fiscal stimulus, however, once President-elect Joe Biden takes office.
“I suspect incoming President Joe Biden will be primarily focused on creating work for the 10 million people who lost their jobs due to the pandemic and are yet to find employment,” James Knightley, ING chief international economist, wrote in a note Tuesday morning. “That means we are likely to see another substantial fiscal stimulus focused on infrastructure and energy. The outcome of the two Georgia Senate seat run-off elections on January 5 will determine the scale.”
8:55 a.m. ET: Third-quarter GDP revised up to 33.4% annualized growth
The U.S. economy grew faster than initially reported in the third quarter, the Bureau of Economic Analysis said in its third print on third-quarter gross domestic product.
Third-quarter GDP grew at a record 33.4% annualized clip, versus the 33.1% annualized rate previously stated. The boost came as personal consumption – the lion’s share of the U.S. economy – was revised up to 41.0% growth, from the 40.6% annualized increase reported earlier.
Still, even the record growth following the worst of the spring stay-in-place orders was not enough to bring U.S. economic activity entirely back to pre-pandemic levels.
“The recession might be technically over after such a strong advance, but third quarter GDP is still 3.4% below the pre-pandemic high in the fourth quarter of 2019,” Chris Rupkey, chief financial economist for MUFG Union Bank, said in an email. “In the Great Recession, the economy only fell 4.0% at the worst point and now the economy is nearly as bad as it was then. The only good news is that corporate profits are rebounding more quickly than expected as companies somehow figured out how to make money during this pandemic.”
7:21 a.m. ET Tuesday: Stock futures point slightly higher
Here were the main moves in markets, as of 7:22 a.m. ET Tuesday:
S&P 500 futures (ES=F): 3,694.75, up 9 points or 0.24%
Dow futures (YM=F): 30,123.00, up 10 points or 0.03%
Nasdaq futures (NQ=F): 12,743.5, up 60 points or 0.47%
Crude (CL=F): -$0.50 (-1.04%) to $47.47 a barrel
Gold (GC=F): -$5.90 (-0.31%) to $1,876.90 per ounce
10-year Treasury (^TNX): -0.3 bps to yield 0.938%
6:01 p.m. ET Monday: Stock futures open flat
Here were the main moves in markets, as of 6:01 p.m. ET Monday:
S&P 500 futures (ES=F): 3,688.25, up 2.5 points or 0.07%
Dow futures (YM=F): 30,121.00, up 8 points or 0.03%
Nasdaq futures (NQ=F): 12,710.25, up 26.75 points or 0.21%