By The Washington Post · Rachel Siegel, Thomas Heath · BUSINESS
The Dow Jones industrial average rose more than 700 points, or 3.4%, shortly after the open. The Standard & Poor's 500 and Nasdaq composites posted gains of 2.15 and 1.7%, respectively.
Senate leaders and the White House came to an agreement on a $2 trillion stimulus deal after midnight, paving the way for quick passage. The emergency package is the largest bailout in history. It provides $1,200 checks to many Americans, a $367 billion loan program for small businesses and a $500 billion fund for industries, cities and states. It also covers $150 billion for state and local stimulus funds, $130 billion for hospitals and additional assistance for the unemployment insurance program.
"We view this package as a turning point in this crisis because it also shows a political willingness to do more later on if needed," wrote Torsten Slok, chief economist at Deutsche Bank Securities, in an email to The Post. "This package will flatten the recession curve and we now need to see a flattening of the virus curve."
Five days of negotiations had sent markets in all directions - stocks tanked Monday after the Senate twice failed to advance the coronavirus stimulus bill, then surged as a deal appeared imminent. On Tuesday, Wall Street saw a massive rally in anticipation of an agreement, with the Dow Jones industrial average climbing nearly 11.4% to its best finish since 1933. The Standard & Poor's 500 Index jumped 9.4% and the tech-heavy Nasdaq composite climbed 8.1%.
Still, the U.S. economy will still face a slew of hurdles after the bill's passage, noted Lauren Goodwin, economist and portfolio strategist at New York Life Investments. There are looming questions about how to save jobs already lost and how quickly the government can send cash straight to households and businesses in urgent need.
"How much will be 'wasted' on companies that don't need it as much, such as those with larger cash reserves or online sales?" Goodwin said. "What 'unknown unknowns' lie ahead in terms of implementation, which could create market stress?"
In Europe, Britain's FTSE 100 was up 0.66%, and Germany's DAX was down 1.39%. The benchmark Stoxx 600 inched up 0.15%. The continent's public health crisis intensifies by the day: The coronavirus death toll in Spain now stands at 3,400, surpassing China's, making it the hardest-hit country behind Italy. Prince Charles, heir to the British throne, has tested positive for coronavirus.
Asian markets flashed green across the board. The Nikkei 225 surged to finish 8%, even after the Tokyo Games were postponed until 2021. Hong Kong's Hang Seng was 3.8% positive. The Shanghai composite popped 2.17%.
Ed Yardeni, president of Yardeni Research, said the country needs to get the virus under control before the economy can breathe on its own, especially as numerous industries have shut down.
"This is a world war against the virus," he said. "While we spend money to soften the blow on workers and companies, we need to mobilize resources to fight the war. There is a desperate need for millions of masks, ventilators and a Manhattan Project for finding a cure."
The Manhattan Project was secret and massive undertaking by the United States during World War II that resulted in the creation of the atomic bomb.