US: Dow ends up 1.9% in rebound on latest Trump stimulus comments

[NEW YORK] Wall Street stocks jumped on Wednesday following more favourable comments from US President Donald Trump on fiscal stimulus spending amid positive sentiment on coronavirus therapeutics.

The Dow Jones Industrial Average gained 1.9 per cent to finish the session at 28,303.46.

The broad-based S&P 500 advanced 1.7 per cent to 3,419.44, while the tech-rich Nasdaq Composite Index surged 1.9 per cent to 11,364.60.

After Mr Trump's announcement Tuesday afternoon abruptly ending talks with congressional Democrats on additional stimulus until after the election, the president and his administration moved quickly to walk back the much-criticised statement.

On Tuesday night, Mr Trump called for Congress to "immediately" pass stand-alone legislation to extend aid for airline workers and small businesses. He also said he would back another round of US$1,200 stimulus payments for workers.

White House economic advisor Larry Kudlow told CNBC on Wednesday that Mr Trump backed targeted measures, adding, "I don't think the recovery depends on the massive assistance package."

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Peter Hanks, a strategist at DailyFX, attributed the rally largely to the shift in tone from the White House, while expressing skepticism.

"Over the longer term, I think we'll need some clarity on this," Mr Hanks said. "If we do come to see that stimulus isn't going to happen until the election, that could undermine some of these larger blue cap stocks, some of the airlines." "I'm a little concerned for the rest of the week and maybe heading into next week," he added.

Besides the comments on stimulus, analysts said the market had become more optimistic about the presidential election given Democratic nominee Joe Biden's lead in the polls, which suggests that a drawn-out and contested outcome may be averted.

Another positive factor was pharma giant Eli Lilly's announcement that it applied for an emergency use authorisation for a lab-produced antibody treatment against Covid-19, after early trial results showed it reduced viral load, symptoms and hospitalisation rates.

AFP