Today is an important day for the Dow Jones Industrial Moving Average. Both the Dow Jones and S&P 500 futures are likely to remain highly volatile. The self-imposed deadline by Congress for the second stimulus package is today. Trump has vowed to take matters in his hands by using executive orders today. Trump wants to extend unemployment benefits, provide eviction protection, payroll tax holiday, and student loan relief through presidential executive order.
Stock traders are hoping for some good news, which would push the coronavirus stock market higher. The fear is that another deadline will pass with no agreement.
Deadline for Second Stimulus Bill
Democrats and Republicans have been trying to resolve their differences over the next second stimulus package for a while now. Congress imposed a deadline to make a decision on the second stimulus bill, and that deadline is today. Given the differences that both Democrats and Republicans have on the second stimulus aid package, it is highly likely that another deadline will pass, and there will be no decision on the second stimulus.
The Dow Jones Industrial Average futures are likely to react negatively if we do not get a green light on the stimulus bill. This is one of the reasons that we are seeing both the Dow and S&P 500 Futures trading in negative territory during the early hours of trading.
Trump to Use Executive Order to Extend Unemployment Benefits
In addition to this, we have President Trump, who is getting frustrated. He has said that he will use the power of the executive order to extend the unemployment benefits if policymakers fail to agree on this. According to Trump, the extension of unemployment benefits can happen as early as today or Saturday via his executive orders.
Payroll Tax Holiday, Eviction Protection and Student Loan Relief
Trump isn’t only expected to extend the unemployment benefits through an executive order, but he has also talked about imposing a payroll tax holiday and provide eviction protection and student loan repayment relief as well. The question remains as to whether legally Trump can actually put all of this in place via presidential executive order. He may have the authority to do part of this, as Nancy Pelosi suggested that Trump may have the authority to extend eviction moratorium via executive order.
But one thing that is for certain is that if Trump executes an executive order on any of the above matters, it will surely create chaos among politicians. His executive orders may soon face many challenges. Thus, there could be enormous uncertainty in the market about the Presidential executive order’s validity in extending the unemployment benefit, providing eviction protection, and issuing a payroll tax holiday.
Stock Market and Uncertainty
Stock markets do not like uncertainty and controversy. If Congress fails to agree on the stimulus bill and Trump takes matters into his own hands, the likely scenario for the stock market may not be a stock rally, but in fact, a sell-off.
The possible reaction among stock traders could be that Trump is stepping outside his territory, and there could be some adverse consequences for him.