Hope is fading that negotiation will resume in an effort to strike a deal regarding another stimulus package. After discussions between the Trump administration and top Democrats collapsed last week, new reports suggest that the fourth relief bill, which would include stimulus checks, is dead, in large part due to the stock market’s recovery.
According to a report from Politico, now that President Donald Trump has signed an executive order targeting several key aspects of relief measures, including enhanced unemployment benefits, there is little pressure to force lawmakers back to the negotiation table to strike a deal. This is partly due to the rebounding stock market. The Dow Jones Industrial Average remains around 1,600 points below where it was before the pandemic swept through the country, forcing businesses to close their doors, though it is still up roughly 9,000 points since hitting its pandemic low in March. Trump on Monday had even praised the swift recovery, stating that "there is no reason why the economy can't grow at a 20% pace in the third quarter."
Big Stock Market Numbers!— Donald J. Trump (@realDonaldTrump) August 11, 2020
The rebound, according to analysts, is in part due to second-quarter earnings that were not as bad as had been feared. Politico reported, however, that the strength also comes from the belief that Republicans and Democrats will end up striking a deal to the tune of $2 trillion, which would be a halfway point between the Republicans proposed $1 trillion HEALS Act and the Democrats $3 trillion HEROES Act. According to Richard Bernstein, founder of investment firm Richard Bernstein Advisors, "the markets perceive this to be a weird political dance in preparation for the election."
At this time, however, much remains in limbo. Although both sides of the aisle have called for talks to resume, they have not yet done that. The nearly two week-long discussions had been taking place between Treasury Secretary Steven Mnuchin, White House chief of Staff Mark Meadows, House Speaker Nancy Pelosi, and Senate Minority Leader Chuck Schumer. Meadows is out for the week, meaning that discussions will likely not resume until next week at the earliest.
Although several reports have suggested that a deal could be dead entirely, most analysts believe that a deal will be reached. Edward Moya, the senior market analyst at foreign exchange trading firm OANDA, said that the president's executive orders "will likely force Democrats to come back to the negotiating table with Republicans."