Dow Jumps Over 300 Points, Federal Reserve Unveils $2.3T Program to Support Economy

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by Daria Rud · 3 min read
Dow Jumps Over 300 Points, Federal Reserve Unveils $2.3T Program to Support Economy
Photo: Depositphotos

Federal Reserve will spend $2.3 trillion on loans for households, small and medium-sized businesses with up to 10,000 employees and less than $2.5 billion in revenues for 2019.

The U.S. stock markets have gone up for the third time this week, with stocks and indices jumping. The upgrading results not only from the optimism of investors who see signs of coronavirus outbreak slowing. The credit also belongs to the U.S. Federal Reserve that has unveiled a new $2.3 trillion program to support the economy in this hard period.

Stock Market Indices Up

Yesterday, Dow Jones Industrial Average index surged by as much as 500 points during the session and closed at 23,433.57. Currently, it is 321 points up, at 23,754.71.

S&P 500 index surged as well. It gained as much as 2%, which brought this week’s increase to more than 12%. At the moment of writing, the S&P 500 is another 1.38% up at 2,787.81.

The Nasdaq Composite Index gained 66 points, or 0.8% to roughly 8,175, and closed at 8090. By now, it has jumped by 0.53% to be at roughly 8,133.

Dan Russo, the chief market strategist at Chaikin Analytics, stated:

“Investors take comfort in the fact they feel like the Fed has their back. If you take that in conjunction with some of the Covid-19 numbers appearing to be on the right track, that’s led to a decrease in pessimism.”

European stock market indices are also rising. For example, FTSE 100 is currently 125.86 points or 2.22% up, at 5,803.59. The Stoxx Europe 600 Index has risen by 1.17% by the moment of writing.

Federal Reserve Unveils New Stimulus Program

Recently, the Federal Reserve announced new means to support the economy that has suffered because of the worldwide pandemic. The institution will spend $2.3 trillion on loans for households, small and medium-sized businesses with up to 10,000 employees and less than $2.5 billion in revenues for 2019.

Federal Reserve Board Chair Jerome H. Powell commented on the initiative:

“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus. The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”

Within the program, principal and interest payments will be put off for one year. Eligible banks will be able to originate new Main Street loans or use Main Street loans to increase the size of existing loans to businesses. Besides, banks will retain a 5% share, while the Main Street facility will purchase the remaining 95%, which is about $600 billion of loans.

Further, the Fed will ‘bolster the effectiveness’ of the Payroll Protection Program by providing term finance to its members.

The U.S. has been hit hard by COVID-19 in all the senses. The country is the first in the number of confirmed coronavirus cases. Moreover, it has a record level of unemployment. As the Federal Reserve estimated, coronavirus job losses could hit 47 million, resulting in a 32.1% unemployment rate.

Business News, Indices, Market News, News, Stocks
Daria Rud
Author Daria Rud

Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.

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