The Dow recouped its losses Monday, as the widely expected rollout of a $900 billion stimulus package helped stocks recover. A surge in financials eased fears that a new strain of COVID-19 will hurt global growth.
The Dow Jones Industrial Average climbed 0.12% or 37 points. Though earlier in the day, it had been down by more than 400 points. The S&P 500 fell 0.39%, while the Nasdaq Composite dipped 0.10%.
Banking stocks were leading the charge higher in helping the market recover losses. On Friday, the Fed after-markets closed. They said it would allow banks to buy back stocks and payout dividends. They based on the latest stress tests, which suggested banks had “strong capital levels.”
The stress test, which started in 2009, is supposed to show what happens to banks’ balance sheets. That is in terms of losses and capital levels and under an extreme hypothetical adverse scenario.
Market Recovery
Closing higher were JPMorgan Chase & Co (NYSE:JPM), Bank of America (NYSE:BAC), and Goldman Sachs Group Inc (NYSE:GS). The latter was surging 6%.
Markets got off to Wall Street’s weak start after a new strain of COVID-19 spread rapidly across England. This prompted new travel restrictions from Canada and parts of Europe, raising concerns about global economic recovery.
Expectations also supported the market recovery. It was about to get a vaccine. Moreover, lawmakers on Capitol Hill were getting ready to vote in favor of a $900 billion stimulus package. This will include direct funding to Americans.
Energy stocks were among the biggest decliners. This was due to the restrictions on global travel scaling back expectations for the recovery in travel demand. This also weighs on oil prices.
Falling airline stocks hurt the industry. United Airlines (NASDAQ:UAL), Delta Air Lines (NYSE:DAL), and American Airlines (NASDAQ:AAL) were all in red. The latter was down 2% on fears of further travel restrictions.
