With news coming out of Washington towards the end of the trading day that lawmakers in Congress had agreed on a $790 billion economic stimulus plan, stocks managed to finish the day slightly higher. The Dow Jones Industrial Average increased 50.65 points (.64%) and the S&P 500 also was up 6.58 points (.80%).
The Congress and the White House didn’t take long to make the necessary compromises to pass the $790 billion economic stimulus bill, and Obama is expected to sign the measure within the next couple of days. About one-third of the bill will be used to provide tax relief for families, as 95% percent of American workers will have their taxes cut. The bill is also meant to create 3.5 million jobs in order to boost the economy and fix our high unemployment rate. The bill also includes sections regarding health coverage, food stamps, and federal funding for distressed state budgets.
Even with such positive news coming from Washington, it is clear that investors were not fully convinced, as the Dow only made a moderate climb of 51 points. While investors might have been acting overly cautious, they have the right to be. The government has been slow and inefficient for the most part in dealing with the recession, and even with all of the government intervention in the private sector that has been going on recently, we are still in the heart of one of the worst economic times in our country’s history. So, while it is impressive that the economic stimulus bill was agreed upon this quickly, it will definitely be a while until we start seeing the effects of the government spending.
Tomorrow is the first time all week that there are no huge announcements expected to come out of Washington. This lack of news from the government will likely lead to more people focusing on the economy and 4th quarter corporate earnings.
Until tomorrow,
Niki Pezeshki
College Trillionaire
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