US equities made a comeback on Tuesday as traders saw the outlook for a new fiscal stimulus program for the US economy emerging before the end of the year.
Wall Street’s S&P 500 index closed 1.3 percent higher and rebounded after four consecutive days of losses. The tech-heavy Nasdaq Composite posted comparable gains.
The turnaround accelerated after an announcement that congress leaders from both parties would meet on Tuesday afternoon for an appeal, which could pave the way for a stimulus deal after months of deadlock.
Increased fiscal support is seen by economists as crucial to keep the recovery from faltering further, especially as coronavirus cases multiply worldwide and governments are once again adopting strict lockdown measures to stop the spread.
Well-known investor Warren Buffett added his voice to the call for a deal on Tuesday, saying the US was waging an “economic war” and more support was needed for small businesses affected by the pandemic.
Global stocks were mixed. The European Stoxx 600 closed 0.3 percent higher, but the strong pound weighed on the multinational companies of the London FTSE 100, which fell 0.3 percent.
The pound gained 0.9 percent against the dollar to $ 1.3449 after reports of significant progress on a trade deal between the UK and the EU.
“Big buzz … among Tory MPs that the UK is heading for a Brexit deal with the EU,” Nicholas Watt, a political editor for the BBC, wrote on Twitter.
Data released Tuesday shows that the UK’s unemployment rate has risen to 4.9 percent in the three months to October, and the country has suffered the largest annual drop in employment in a decade. Still, some economists are getting more optimistic about next year.
“With vaccine rollouts expected to boost demand in 2021, we now think the unemployment rate will peak at 7 percent instead of 9 percent and return to 4 percent by 2023,” said Ruth Gregory, senior economist in the US. UK at Capital Economy.
Expectations for a recovery in the world economies would also “accelerate”. . . the spread in valuations between growth and value stocks, ”said Didier Rabattu, head of shares at Lombard Odier Investment Management.
US Treasuries were sold on Tuesday, pushing the yield on the 10-year benchmark higher by 0.02 percentage points to 0.91 percent. Revenues rise as prices fall.