The Federal Reserve launched and unprecedented 'Main Street' funding support plan Thursday that will pump more than $2.3 trillion into the U.S. economy as it continues to battle the coronavirus pandemic.
The Fed said it will use $75 billion in Treasury capital to purchase up to $600 billion in small and mid-sized business loans, and lend around $500 billion to states and cities around the country. The four-year loans will focus on companies with 10,000 employees or less, the Fed said, and will compliment the central bank's previous announcement of its intention to purchase municipal bonds.
The Fed will also extend facilities to support credit markets by another $850 billion, the central bank said.
"Our country's highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,' Fed chairman Jerome Powell said. "The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible."
U.S. equity futures surged higher on the Fed news, with contracts tied to the Dow Jones Industrial Average indicating a 360 point gain and those linked to the S&P 500 suggesting a 36 point gain for the broader benchmark.
"I'm stunned by this," said the TheStreet's founder, Jim Cramer. "The Fed is determined not to be the reason if this economy slides into depression."
The Fed move followed news that more than 6.6 million Americans filed for unemployment benefits last week, the Commerce Department said, taking the three-week tally to around 16 million as nearly all of the U.S. economy remains under some form of 'stay-at-home' lockdown amid the still-expanding coronavirus pandemic.