Market Brief: March 26, 2020

A daily summary of news, analysis and data shaping the market.
Market Brief
Thursday, March 26, 2020
Return of the Bull. Stocks soared for a third straight day Thursday, with investors focusing on Senate passage of a $2 trillion stimulus package and appearing to look past a surge in first-time jobless claims to a record 3.28 million last week. The Dow Jones Industrial Average finished around 1,352 points higher, a gain of 6.4%, to end near 22,552, according to preliminary figures. Its gains took it back into bull-market territory. The S&P 500 advanced around 155 points, or 6.12, to close near 2,630, while the Nasdaq Composite ended around 7,798, a gain of 413 points, or 5.6%.
DJIA 22,552.17 1,351.62
S&P 500 2,619.44 143.88
NASDAQ 7,797.54 413.24
US 10-Year Note 0.84 -0.02
Dollar Index 99.28 -1.76
Crude Oil 23.18 -1.31
Gold 1,644.90 11.50
Global Dow 2,505.99 102.52
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The Senate Passed Its $2 Trillion Relief Bill. What Happens Next?
Just before midnight Wednesday, the Senate did what it had seemed on the verge of accomplishing for days and passed a $2 trillion economic relief package.

The bill passed the Senate unanimously and was headed to the House, where it is expected to pass in a voice vote Friday morning, setting up President Donald Trump to quickly sign it into law.

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Here’s How the $2 Trillion Aid Package Breaks Down for Households
The $2 trillion rescue deal struck by Congress and the Trump administration includes roughly $300 billion in direct payments to households as well as $250 billion in expanded unemployment benefits.

The aid package allows for one-time checks of $1,200 to Americans with adjusted gross income up to $75,000 for individuals and $150,000 for married couples. Individuals and couples are eligible for an additional $500 per child. The payments decline by $5 for each $100 of income over those thresholds, and phase out for individuals whose incomes exceed $99,000, $146,500 for head of households with one child, and $198,000 for joint filers without kids.

In addition to the one-time checks, the Senate aid package includes a broad expansion of unemployment benefits. The bill allows for such benefits to extend to nontraditional employees, including gig workers and contractors who lack benefits in some states. Current unemployment assistance would rise by $600 a week for four months (through July 31).

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3.28 Million Americans File for Unemployment Benefits—10 Times as Many as Last Week
More Americans filed for unemployment insurance last week than ever before as the coronavirus pandemic forces businesses across the country to close.

In the week ended March 21, seasonally adjusted initial jobless claims were 3.28 million, up more than 1,000% from a revised 282,000 in the prior week, the Labor Department said Thursday. The result was far worse than the average Wall Street estimate: Economists polled by Bloomberg expected 1.64 million in new jobless claims.

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Airline Stocks Rally on Senate Passage of Stimulus Bill
Airline stocks continued to rally Thursday after the Senate passed a $2 trillion stimulus bill that included more than $50 billion in grants, loans, and tax breaks for passenger and cargo carriers.

Air travel isn’t likely to recover soon. But the stocks could continue to climb as the risk of bankruptcies and a liquidity crunch fades.

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How the Stimulus Bill Could Help Boeing
The stimulus bill passed by the Senate includes much-needed support for workers and many industries, including the hardest hit sectors of the economy such as air travel.

Boeing—one of the two dominant aircraft makers—is supportive of the bill, but it isn’t clear the company will take bailout dollars. CEO Dave Calhoun said earlier this week Boeing won’t take special support if it comes with too many strings attached. Still, federal loan guarantees and payments to the aviation industry are good news for Boeing. It wants its customers to be healthy. And Covid-19 is the worst episode in the airline industry’s history.

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Here’s What the Stimulus Bill Would Mean to the Health-Care Industry
The stimulus bill meant to help mitigate the damage caused by the Covid-19 pandemic includes billions of dollars for the health-care industry, which will need to treat an expected deluge of critically ill patients.

According to the Senate text, the bill creates a $100 billion fund for grants to health-care providers to help with expenses or lost revenues attributable to Covid-19. The bill gives Secretary of Health and Human Services Alex Azar substantial leeway in how the funds will be allocated, according to an analysis from Raymond James analyst Chris Meekins.

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Cheesecake Factory Tells Landlords It Won’t Pay April Rent After Loss of Income
The Cheesecake Factory sent a letter notifying landlords that its restaurants won’t pay rent for the month of April after business slowed sharply because of the coronavirus pandemic.

In a letter dated March 18, Cheesecake Factory Chairman, founder, and CEO David Overton wrote that the chain’s locations will resume paying rent as soon as possible.

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This Is How China Plans to Get Consumers to Spend Post-Coronavirus. Will It Work?
As China gets the factories humming and tries to bring its economy back to life after more than two months of coronavirus lockdown, getting consumers to spend may prove the biggest challenge of all.

That’s because enticing consumers carries a risk of triggering fiscal pressure, analysts Miao Ouyang, Helen Qiao and Xiaojia Zhi at Bank of America Merrill Lynch, told clients in a note Thursday.

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Dividends Are in Danger. Here Are Some Relatively Safe Plays.
Many companies have suspended or cut dividends in recent weeks as the coronavirus outbreak has severely curtailed business, and hundreds more are possible in coming weeks and months. IHS Markit is forecasting that 230 of the largest 1,800 global companies will suspend their dividends.

That gloomy assessment, however, doesn’t mean dividends are dead everywhere. “There are plenty of opportunities to find equity income right now,” says David Kelly, chief global strategist at JPMorgan Asset Management, though he cautions that it depends on the individual company and sector. “There are plenty of sectors that will get through in a tough scenario,” he says, pointing to financials and health care as examples.

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The Cares Act Will Allow People to Use Their 401(k) Savings Penalty-Free and Defer RMDs
The $2 trillion coronavirus-relief bill Washington lawmakers have crafted includes provisions that make it easier for people to access their retirement savings and give retirees options to defer required minimum distributions at a time when the broad stock market is down more than 23% this year.

To qualify for the provisions, individuals need to fall into one of two main categories. You, your spouse or a dependent is diagnosed with Covid-19, the disease caused by the new coronavirus. Alternatively, you qualify if you have experienced adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care or closures related to the coronavirus pandemic.

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