Stocks climbed slightly higher Tuesday. That’s slightly compared to the magnitude of market moves most days during the coronavirus-induced sell-off.
The gains began even before news broke that Treasury Secretary Steve Mnuchin is submitting a fiscal stimulus proposal to Congress, which could include $850 billion.
All three major U.S. indexes rose before news of the proposal broke. All three rose more than 1%, with the S&P 500 up 1.2%. The 10-year treasury yield rose slightly to 0.8%. Tuesday night, futures pointed to a magnitude of a market move that wold require another limit-up limit-down rule.
This comes after a 12% sell-off Monday. The S&P 500 is now 29% below its all-time high, representing a deepening bear market.
Mnuchin proposed $50 billion of subsidies for the struggling airlines companies, which are seeing next to zero flight activity amid the Coronavirus outbreak. United Airlines (UAL) - Get Report and Delta (DAL) - Get Report shares were up more than 2% in premarket trading, before falling in regular hours by 6.3% and 4.35%, respectively.
United and Delta are down 62% and 45% from their 2020 highs, respectively.
The other $800 billion in the stimulus proposal is reportedly for Coronavirus relief an potentially other forms of stimulus.
Wall Street has been hoping for virus relief and calling for fiscal stimulus, as the impact of looser monetary policy is fading and the Federal Reserve runs out of told to use to support the economy.
Mnuchin’s form of fiscal spending would be welcomed ,but investors may want to see structural changes like take cuts.