A Glimmer of Hope

By Alex Eule |  Tuesday, March 17

The New Playbook. There are sure to be many dark days in the coming weeks and months, but we'll also get the occasional time for optimism. Tuesday felt like one of those days and not just because stocks soared.  

After weeks of futile efforts from the Federal Reserve and other federal officials, the U.S. government demonstrated that it's finally grappling with big new ideas that could help U.S. companies and citizens through the crisis. Treasury Secretary Steven Mnuchin is talking about a $1 trillion stimulus package, which would include stimulus targeted to industries most affected by the pandemic and the resulting economic shutdown. But perhaps the biggest surprise was that the plan could include direct payments to individuals. The payments would reportedly be means-tested.

Stocks rallied on the news, with the Dow Jones Industrial Average rising 1,049 points on the day, or 5.2%. The S&P 500 soared 6%. 

(The Dow was off as much as 1.5% this morning before the White House press conference that outlined the stimulus efforts.)

It was a stark contrast to how investors received the Fed's recent efforts to blunt the economic fallout of Covid-19. Twice in the last two weeks, the Fed has made emergency interest rate cuts and twice stocks have tumbled in response. Wall Street has been sending a clear signal that the old playbook of cutting rates and buying bonds wasn't going to work this time around. 

The Trump administration seems to have gotten the message. Of course, stocks could easily fall again tomorrow. Nervous investors have been selling the rallies in recent weeks, so tomorrow's trading will say a lot about how much hope investors have for the new fiscal stimulus plan. And, of course, it still needs to win the approval of Congress. Legislators are likely to move quickly, but anything can happen in Washington.  

Corporate American has begun to step up as well. It's offering free Internet, exclusive shopping times for more vulnerable senior citizens, and free digital learning hubs. Here's our list highlighting the first wave of help from U.S. companies.

Elsewhere on the corporate front, FedEx has become the latest company to withdraw its 2020 financial guidance as a result of coronavirus uncertainty. FedEx's stock initially jumped in late trading Tuesday because fiscal third-quarter revenue easily topped Wall Street estimates. "While the global economic impact from recent social-distancing mandates is uncertain, we remain well positioned to assist our customers as they work to manage their supply chains and inventories," CEO Fred Smith said in a statement. "We will continue to support efforts to combat the pandemic."