U.S. Republicans and Democrats look ready to restart negotiations on the new coronavirus aid package. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi signaled that both sides were ready to discuss new proposals.
The U.S. economy clearly needs more stimulus to support consumer activity. However, traders are skeptical that a consensus can be reached, and S&P 500 futures are losing ground in premarket trading.
Previously, Republicans signaled that they were ready to vote for an aid package worth $1.3 trillion while Democrats proposed a package worth $2.2 trillion. There is a huge gap between the positions of two sides, and any deal will require big compromises from both parties.
Oil managed to stay close to the $40 level despite the recent market sell-off as declining inventories provided support to prices. At the same time, energy-related stocks had a terrible week, and S&P Energy Sector lost 8.5% in the first four days of this week.
The current market sentiment towards energy-related stocks is negative, and it looks like oil must go higher to provide some support to the beaten shares.
However, oil is under pressure due to problems with coronavirus in various parts of the world, and it remains to be seen whether traders will be willing to increase their bets on oil above the $40 level.
U.S. has just provided Durable Goods Orders report for August which indicated that Durable Goods Orders increased by 0.4% month-over-month. The analyst consensus called for growth of 1.5%.
Excluding Transportation, Durable Goods Orders grew by 0.4% compared to analyst consensus of 1.2%.
Together with yesterday’s Initial Jobless Claims report, Durable Goods Orders report painted a picture of an economy that is slowing down after the initial rebound.
The key question is whether traders will bet that disappointing economic reports will push Republicans and Democrats to reach consensus on the new aid bill. If this happens, stocks may have material upside from current levels. #StockMarket##US#
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