Stocks rose on Wednesday as investors weighed whether the $2 trillion stimulus package may offset some of the economic pain of the coronavirus pandemic. The package would provide direct payments to most Americans, expand jobless benefits, provide $367 billion to small businesses, and assist state and local governments.
The Dow rose 496, or 2.4%, to 21,201 on Wednesday. The broad-based S&P 500 rose 1.2%, while the tech-heavy Nasdaq slipped less than 1%.
The gains come after the Dow on Tuesday surged 2,113 points, or 11.4%, marking the biggest ever point gain in the index and the largest percentage gain since 1933. Investors were hopeful that the $2 trillion package may offset some of the economic damage inflicted on the U.S. economy by the pandemic.
Millions of workers are expected to lose their jobs as businesses shut down and consumers curb their spending as they hunker down in self-quarantine and under "shelter-in-place" orders.
The stimulus package "should help to support an eventual recovery once the coronavirus outbreak has been brought under control," Capital Economics wrote in a Wednesday note.
"Even that won't be enough to prevent a sharp decline in GDP in the second quarter, but it should help to support an eventual recovery once the coronavirus outbreak has been brought under control," the research firm added.
The stimulus package includes a fiscal expansion that's worth up to 5% of GDP, and could provide as much as $6 trillion in temporary financing to businesses and consumers in the next few months, Capital Economics said. As a growing number of states order non-essential businesses to shut to contain the virus, President Donald Trump on Tuesday said he wants the U.S. "" by Easter.
One economist called that accelerated timeline for restarting the American economy unrealistic.
"The death data are more reliable and continue to rocket, doubling every three days," said Ian Shepherdson, chief economist with Pantheon Macroeconomics in a report. "If this continues for just two more weeks, the death toll will breach [10,000] by Easter. The president's talk yesterday of re-opening the economy and seeing 'packed' churches by Easter is a fantasy."
The two-day rise in the Dow is far from reversing the extended slump that began in February. Since notching an all-time high on February 12, the index has shed almost 30% of its value. That means the market remains in "bear" territory, or when stocks lose at least 20% of their value from their most recent high.