Traders work on the floor of the New York Stock Exchange.
Stock futures were mostly on Thursday night after President-elect Joe Biden announced details of a $ 1.9 trillion stimulus plan, one of the high items on his agenda when his administration begins next week.
Contracts related to the Dow Jones Industrial Average reached 25 points, or 0.1
Biden’s proposal, called the U.S. Rescue Plan, includes raising additional federal unemployment benefits to $ 400 a week and extending them until September, direct payments to many Americans of $ 1,400, and extending federal moratoriums on expulsions and foreclosures until September.
The plan also provides $ 350 billion in aid for state and local governments, $ 70 billion for Covid’s testing and vaccination programs, and raising the federal minimum wage to $ 15 an hour.
Savita Subramanyan, head of the US equity strategy at Bank of America, told CNBC’s “Fast Money” that additional government spending is part of the reason why market leadership could shift from technology stocks to cyclical stocks in 2021.
“We have this petri dish, where everything that was useful for technological and secular growth is starting to change,” Subramanyan said.
The announcement comes after a calm day on Wall Street, where the three major indexes ended with slight losses after technology stocks disappeared late in the session. The stimulus deal was projected in other areas as the more economically dependent Russell 2000 rose by more than 2%.
A major major relief bill has been widely expected in recent weeks, especially after a labor market report in December saw the economy lose jobs and Democrats won two key Senate races in Georgia, giving Biden’s party tight control over the two chambers of Congress.
Another spending bill focusing on climate change and infrastructure, among other initiatives, is expected to be presented in February, according to senior Biden officials.
It remains unclear whether Biden’s proposal will be welcomed in a sharply divided Congress. Although Democrats hold both houses, they will have to shake moderate members of their own party, such as West Virginia Sen. Joe Manchin and some Republicans, to increase spending. Democrats initially pushed for a new package of many trillions last year before agreeing to a $ 900 billion bill in December.
On Friday, investors will get a new look at the big banks, as Wells Fargo, Citigroup and JPMorgan Chase report their profits for the fourth quarter. There will also be new data on retail sales and inflation.
– Thomas Frank of CNBC contributed to this report.