Dow Jones Climbs to All-Time High as Stimulus Gets Support
The Dow Jones Industrial Average continues to climb higher as investors’ appetite remains positive. The market believes growth is coming.
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- Dow Jones Industrial Average climbs to record highs
- Top CEOs urge Congress to act on the stimulus bill
The Dow Jones Industrial Average continues to climb higher as investors’ appetite remains positive. The rally in equities suggests that market participants believe growth is coming. However, economic indicators point out that recovery still has a long way to go. The market has been signalling for a while that the economy that went into a deep recession last year is now set to rise. Major US stock indexes have been setting records and making new highs both in January and February 2021. Most recently, on Wednesday, the Dow Jones Industrial Average made a new record top, climbing 1.35%, or 424.51 points, to a close at 31,962.
In addition, long-term bond yields are rising and inflation expectations are at their highest in years. Oil is also in a bull run, up over 300% since the pandemic lows in March last year. Moments of caution this year have been short-lived as investors fear missing the next leg up in individual stocks like GameStop or coins in the cryptocurrency market like Bitcoin or Dogecoin. Earlier this week, investors rushed to sell their tech stocks due to fears about rising inflation and rising long-term interest rates. The move pushed the Nasdaq Composite down by 3.9% in a day. Tech stocks bounced back on Tuesday after Fed Chairman Jerome Powell reassured that the central bank will leave its monetary policy unchanged and will keep low rates for the foreseeable future.
Major Backing for the Stimulus Plan
The rally in the markets yesterday was underpinned by progress over the proposed fiscal stimulus by President Joe Biden. The CEOs of Goldman Sachs and Blackstone were some of the new stimulus supporters backing the swift approval of the $1.9tn package. David Solomon of Goldman Sachs and Steve Schwarzman of Blackstone cosigned a letter from a group of 150 senior Wall Street executives. While President Biden is stepping up efforts to find common ground in Congress, top business leaders sent a letter to congressional lawmakers in which they call for “immediate and large-scale federal legislation to address the health and economic crises brought on by the COVID-19 pandemic”.
“Previous federal relief measures have been essential, but more must be done to put the country on a trajectory for a strong, durable recovery,” the letter says. “Congress should act swiftly and on a bipartisan basis to authorize a stimulus and relief package along the lines of the Biden-Harris administration’s proposed American Rescue Plan,” the leaders added.
The letter comes ahead of the House vote on the bill where it is expected to pass and move forward to the Senate. The Democrats will attempt to pass the bill in Senate using the procedure called reconciliation, which requires a simple majority, instead of the 60 votes usually necessary.
President Biden’s stimulus plan has been the top priority since his election campaign. The relief package includes direct payments worth $1,400 for individuals earning up to $75,000 a year, an extension of unemployment benefits, and funding for state and local governments, among other measures.