Both Parties Agree On A $900 Billion Stimulus Package

Both Parties Agree On A $900 Billion Stimulus Package
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Commenting on the agreement on a $900 billion coronavirus stimulus package on today’s trading, Gorilla Trades strategist Ken Berman said:

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The major indices are all trading significantly lower at midday, as following last week’s drop in volatility, financial markets were shaken by two European events overnight. The failed round of Brexit negotiations and the spread of a new, aggressive variant of the COVID-19 in the U.K. are behind the “storm”, but we also got positive news this weekend. The two parties finally managed to agree on a $900 billion stimulus package following months of grinding talks, and the bill could be passed as soon as this afternoon, limiting the damage of the delay.

The package includes $600 stimulus checks, extra unemployment benefits of $300, paycheck protection for small businesses, funds for schools, vaccine distribution, transportation, and an extension to the eviction moratorium. The fears of the new strain of the virus led to a slew of new travel restrictions and lockdown measures in Europe putting pressure on energy- and travel-related stocks in early trading. On a positive note, small-caps, which have been leading the way higher in recent weeks have recovered well from the overnight plunge, and that could mean that a major “sell-the-news” event isn’t ahead in the wake of the stimulus deal.

Market Wrap

Dow: 30,015, - 164 or 0.5%

S&P 500: 3,664 - 45 or 1.2%

Nasdaq: 12,615, - 140 or 1.1%

Russell 2000: 1,951, - 19 or 1.0%

Market breadth has been in line with the performance of the major indices this morning, with decliners outnumbering advancing issues by a 5-to-1 ratio on the NYSE at midday. 9 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 97 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to a mixed and choppy afternoon. All of the key sectors are in the red at midday, but apart from energy stocks, cyclical issues are slightly better off than the main defensive sectors and tech stocks which is a positive sign for the rest of the holiday-shortened week. Stay tuned!

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