NEW YORK — Stocks scored their first back-to-back gains Wednesday since a brutal sell-off began five weeks ago, but much of an early rally faded late in the day as a last-minute dispute threatened to hold up a $2 trillion economic rescue package in Congress.
The S&P 500 rose 1.2%, bringing its two-day gain to 10.6%. It had been up 5.1% earlier in the day as Congress moved closer to approving the plan to provide badly needed aid to an economy that has been ravaged by the coronavirus. The market is now down nearly 27% since setting a record high a month ago.
Many on Wall Street say they don’t think stocks have hit bottom yet, but optimism rose after the White House and Senate leaders announced an agreement on the aid bill early Wednesday. A vote had been expected in the Senate by the end of the day, but then some lawmakers balked at the proposed bill.
GOP Senators Tim Scott, Ben Sasse and Lindsey Graham demanded changes, saying the legislation as written “incentivizes layoffs” and should be altered to ensure employees don’t earn more money if they’re laid off than if they’re working. Complicating the standoff, Sen. Bernie Sanders of Vermont said he would block the bill unless the conservatives dropped their objections.
Investors were anxiously waiting for the aid in the rescue package, which lawmakers hope will help blunt the blow to the economy as businesses shut down to slow the spread of the coronavirus.
“They’re hitting on all the right elements of what the U.S. economy needs during the shutdown to bridge itself to the other side to open up economic activity,” said Darrell Cronk, chief investment officer of Wells Fargo Wealth and Investment Management.
With widening swaths of the economy shutting down and layoffs mounting, economists are sure a steep drop-off is coming. They’re forecasting a report on Thursday will show a record number of Americans filed for unemployment benefits as layoffs sweep the country. What’s unsure is how long it will last.
On Wednesday, the S&P 500 was down as much as 1.6% before it turned decisively higher. It ended the day up 28.23 points to 2,475.56. The Dow Jones Industrial Average rose 495.64 points, or 2.4%, to 21,200.55. It had been up more than 1,300 points before the rally faded. The Nasdaq swung from a gain of 3.4% to a loss of 0.5% as it dropped 33.56 points to 7,384.30.