After a weak meeting on Wall Street yesterday, when the Democratic House Speaker, Nancy Pelosi, and Treasury Secretary Steven Mnuchin looked forward to a breakthrough on an economic stimulus package, U.S. stocks will open higher on Tuesday.
Futures contracts for the Dow Jones rose 79 points, while futures for the S&P 500 and the technology-heavy Nasdaq Composite climbed into positive territory, reflecting cautious optimism about an economic stimulus package.
In their recent discussions on a coronavirus stimulus package, Pelosi and Mnuchin are said to have made some progress on a relief bill, according to Pelosi’s office. The two plan to hold further talks on Tuesday.
In an almost hour-long telephone conversation, they had “further narrowed their differences,” California Democratic spokesman Drew Hammill said in a tweeted statement.
“The speaker continues to hope that by the end of the day on Tuesday we will have clarity about whether we will be able to pass a bill before the election,” he said.
The speaker and secretary Mnukhin spoke today at 3:00 p.m. for about 53 minutes. In this appeal, they continued to reduce their differences. The spokesman has asked the committee chairmen to reconcile differences with their GOP colleagues in key areas. (1/2)
– Drew Hammill (@Drew_Hammill) October 19, 2020
Tweet from Drew Hammill
On Sunday, Pelosi gave the White House 48 hours to reach an economic stimulus agreement that could be passed in Congress before the election. She called on the Trump administration to settle the remaining disputes.
In a letter to the House Democrats on Sunday, the speaker said she was “optimistic that we can reach an agreement before the election.
Pelosi added that “we are writing a [legislative]language during the further talks,” “so that we are fully prepared to move forward once we reach an agreement. However, Pelosi said that Republicans in the Senate pushing for a smaller price tag was a potential stumbling block to any agreement.
Negotiations on stimulus packages have dragged on for several months as the pandemic continues to spread across the states and millions of Americans remain unemployed.
Yesterday Wall Street slid into the red as Dow and S&P suffered their fourth day in five days in negative territory. The Nasdaq posted losses for the fifth day in a row.
Edward Moya, senior analyst at Oanda, said in a note via Bloomberg: “Risky assets are losing their mojo after discouraging virus updates, countless stimuli that won’t help until after the election, and as central banks remain in a wait-and-see mode.
“The QE for lifetime trading does not seem to disappear in the foreseeable future, but that is not a sufficient reason to buy stocks now.
It comes as a series of central bankers paint a bleak picture of the economic outlook. Richard Clarida, Vice Chairman of the Federal Reserve, expressed concern that the recovery of the domestic economy will probably take at least another year.
Meanwhile, ECB President Christine Lagarde said that new restrictions in Europe would further set back any recovery unless new monetary and fiscal stimulus measures were taken.