Traders work on the trading floor of the New York Stock Exchange.
Stock futures were mostly flat Thursday night after President-elect Joe Biden announced details of a $ 1.9 trillion stimulus plan, one of the top agenda items when his administration begins next week.
Contracts tied to the Dow Jones Industrial Average rose 25 points, or 0.1%. Those for the S&P 500 and Nasdaq 100 also gained around 0.1%.
Biden’s proposal, known as the American Rescue Plan, includes increasing federal additional unemployment benefits to $ 400 per week and extending it through September, making direct payments to many Americans of $ 1,400, and moratoriums on evictions and foreclosures of the federal government until September.
The plan also provides for $ 350 billion for state and local governments, $ 70 billion for Covid testing and vaccination programs, and a rise in the federal minimum wage to $ 15 an hour.
Savita Subramanian, head of US equity strategy at Bank of America, told CNBC’s Fast Money that the additional government spending is part of why market leadership could move from technology stocks to cyclical stocks in 2021.
“We have this petri dish that changes everything that is good for technology and worldly growth,” Subramanian said.
The announcement comes after a quiet day on Wall Street with the top three indexes ending up in slight losses after tech stocks faded late in the session. However, expectations of the economic agreement were also reflected in other areas, as the more economically dependent Russell rose more than 2% in 2000.
A third major bailout bill has been widely expected in recent weeks, particularly after the December labor report resulted in job losses for the economy and the Democrats won two major Senate races in Georgia, giving Biden’s party control of both houses of the Congress restricted.
Another spending bill, which focuses on climate change and infrastructure, among other things, is slated to be introduced in February, according to senior Biden officials.
It remains unclear whether Biden’s proposal will be welcomed in a sharply divided Congress. Though Democrats hold both houses, they must lobby moderate members of their own party like West Virginia Senator Joe Manchin and some Republicans to increase spending. The Democrats originally pushed for another multi-trillion package last year before agreeing on a $ 900 billion bill in December.
On Friday, investors get a fresh look at the big banks as Wells Fargo, Citigroup and JPMorgan Chase report their fourth quarter earnings. There will also be new data on retail sales and inflation.
– CNBC’s Thomas Franck contributed to this report.