By Yasin Ebrahim
Investing.com – Wall Street surged on Wednesday, building on its biggest one-day rally since the Great Depression a day earlier, as investors continued their bullish bets on stocks. The White House and Congress reached a deal on a $2 trillion stimulus package to support the economy through the Covid-19 pandemic, though voting has reportedly been held up by a drafting error in the bill that encouraged layoffs.
The Dow jumped 5.35%, or 1,106 points, the S&P 500 gained 4.00% and the Nasdaq Composite added 2.26%.
The coronavirus stimulus package, which could include one-time checks worth $1,200 to Americans, tax breaks and bailouts to industries hurt by the impact from the virus such as aviation and hospitality, is expected to clear the Senate in a vote later today, with a vote in the House reportedly slated for Thursday.
Voting the stimulus package hit a small snag, however, after three Republican U.S. senators on Wednesday said legislative language included in the bill encouraged layoffs and would need fixes, Reuters reported. "If the federal government accidentally incentivizes layoffs, we risk life-threatening shortages in sectors where doctors, nurses, and pharmacists are trying to care for the sick, and where growers and grocers, truckers and cooks are trying to get food to families' tables," Senators Tim Scott, Lindsey Graham and Ben Sasse said in a joint statement. "We must sadly oppose the fast-tracking of this bill until this text is addressed, or the Department of Labor issues regulatory guidance that no American would earn more by not working than by working," they said.
The progress on the stimulus package comes after days of negotiations after it failed to secure enough votes earlier this week.
Companies that take a loan through the stimulus package, however, will be restricted from buying back their stock until one year after the loan is repaid and also will not be allowed to pay any dividends if their loan is outstanding, CNBC reported.
Energy and industrials were among the biggest gainers on the day, putting the broader market on pace for two-straight daily wins for the first time since Feb. 5-6.
Energy, one the hardest hit sectors during the coronavirus pandemic so far, has caught a bid lately, with investors piling into beaten-down stocks in the sector such as Valero Energy (NYSE:VLO) and Marathon Petroleum (NYSE:MPC).
Boeing (NYSE:BA) continued its surge on expectations it would get a large amount from the stimulus package. And CEO David Calhoun has allayed fears about the company's balance sheet, insisting that the company has other options to raise funds if the government bailout comes with strings attached.
In an interview on Fox News a day earlier, Calhoun insisted that the company had plenty of alternative options to raise funds if the U.S. government demanded a stake in the company in exchange for a bailout.