US stocks struggled to continue their midweek rally Wednesday even after Congress and the White House agreed on a massive stimulus package to address the coronavirus pandemic.
The Dow Jones industrial average climbed as much as 736.37 points, or 3.5 percent, in early trading after lawmakers reached an overnight deal for a $2 trillion spending package to blunt the economic damage from the virus.
But the blue-chip index pared the gain to 280.11 points, or 1.3 percent, as Wall Street’s two other indexes sputtered. The S&P 500 was off 0.3 percent as of 10:49 a.m. after jumping more than 1 percent at the open. And the Nasdaq composite was recently down 0.8 percent after an early gain of 1.8 percent.
The choppy trading came after the Dow surged more than 2,100 points on Tuesday on hopes that Congress would finally match the Federal Reserve’s aggressive response to the coronavirus. The blue-chip index has not closed two consecutive days in the green since early February as the pandemic pushed it into a bear market.
But market observers say the virus will remain a threat to the economy and the stock market as long as it continues to spread in the US even despite Congress’s enormous effort to stanch the bleeding.
“Stimulus is what you do for a slowing economy. This is an economy that’s gone into cardiac arrest,” Josh Brown, CEO of Ritholtz Wealth Management, wrote in a commentary. “So we’re taking out the paddles to try to keep it alive awhile longer.”
It’s likely “premature” to hail the stimulus deal before Congress finalizes its terms and reveals all the hairy details, said Ed Moya, senior market analyst at OANDA.
“Volatility is likely to remain on overdrive and it will be difficult to imagine a scenario that will see global equities further advance throughout the remainder of the week,” Moya said.
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