Boeing and the Airlines Drive Markets Higher

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The $2 trillion fiscal stimulus plan approved by Congress is lifting stocks, and specifically airlines and Boeing  (BA) - Get Report

Investors are hesitant about the plan, as it doesn’t solve the greater coronavirus problem, which is causing a seemingly indefinite recession. Still, stocks got a near-term boost Wednesday, as households and businesses got the same. 

All three major indexes rose, with the Dow Jones Industrial Average leading the way, up 5% and the S&P 500 up 3.3%. 

In the stimulus plan, families receive a payment of over $1,000. Airlines get $50 billion in government loans. Boeing is receiving tens of billions of dollars in loans and it is also resuming 737 MAX production in May. Plus, the airline aid helps with projected Boeing production and sales. Hospitals get $150 billion from the federal government. Small businesses get more than $350 billion. 

Airlines were asked to suspend share buyback programs and dividend payments, an outcome investors were happy to accept if it means conserving cash, getting loans and staying in business. 

Here were some huge gainers:

  • Boeing: +33%

Insurance companies got a boost, as near-term improvements in liquidity of companies may mean fewer payouts made and better corporate credit for insurance premiums. These stocks got a boost:

  • Zurich Insurance  (ZURVY) : +7%

The Hatford HIG, which focuses on small business insurance, only rose 2.45%, as some are worried the small business relief may not be completely adequate. 

"When I look at all the help that’s trying to get out there, these firms [very small businesses] don’t have government resources to help things to understand which things to apply,” Amy Friedrich, President of U.S. Insurance Solutions at Principal Financial Group told TheStreet. 

"I am looking at — is there an ability for businesses to understand? Are there any provisions in these grants that will give them some money to cover operating costs.” 

In the bill, there is $10 billion in total for small business emergency grants and up to $10,000 for each small business. Small businesses recently usually account for roughly 44% of U.S. GDP, according to the Office of Advocacy. That was roughly $9 trillion of small business output in 2019. 

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