Dow rebounds after slump as Trump tests positive for Covid

by Jonathan Adams

The Dow Jones Industrial Average gained 44 points after an initial loss of 443 points, while the S&P 500 cut its loss to 0.5 percent

The Dow shrugged off President Donald Trump’s COVID-19 diagnosis on Friday after an initial slump, briefly swinging positive in afternoon trading on hopes of a stimulus deal.

Trump announced his diagnosis at 12.54am Friday on Twitter, sending stock index futures and global equities plunging.

Wall Street’s main indexes tumbled at the open on Friday, but sentiment firmed up throughout the session as optimism rose that Congress may be able to get past its partisanship to deliver more support for the economy.

After slumping as much as 1.7 percent after trading began, the S&P 500 wavered through the day before cutting its loss to 0.5 percent by the afternoon. The Dow Jones Industrial Average swung from a loss of 433 points to a gain of as much as 44 points.

House Speaker Nancy Pelosi told airlines in the afternoon to stop furloughing workers because aid for them is imminent.

She said a wider rescue package for the economy, one that investors have long been agitating for, could also perhaps be on the way.

Earlier Friday morning, markets appeared set for much sharper declines. Stock futures and Treasury yields tumbled after Trump tweeted overnight that he and First Lady Melania Trump had tested positive for COVID-19.

His tweet came just hours after the White House announced that senior aide Hope Hicks had come down with the virus after travelling with Trump several times this week.

Traders sold riskier investments like tech stocks and shifted money into less volatile assets, like US government bonds.

A report showing another slowdown of hiring by US employers last month did little to brighten the mood.

The positive test reading for the leader of the world’s largest economy heaps uncertainty onto a growing pile of unknowns investors are grappling with, first among them how it might affect the November 3 election and American policies on trade, tariffs and many other issues beyond then.

With a bipartisan deal continuing to elude House Speaker Nancy Pelosi and the White House, the US House of Representatives on Thursday approved a $2.2 trillion Democratic plan on fiscal aid, but objections from top Republicans are likely to doom the plan in the Senate.

We are seeing some risk aversion on the back of the Trump news, although as yet the moves we’re seeing are quite modest, Oanda analyst Craig Erlam told AFP. Should Trump’s health deteriorate, I expect we would see more significant moves, but there’s no sign of that at this moment.

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