Market Update (March 10)

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COVID-19 Stimulus

Congress passes long awaited stimulus bill

On Wednesday, Congress officially passed the massive $1.9 trillion coronavirus relief bill, sending it to President Biden, who hopes to sign it on Friday. This is the largest ever stimulus package passed in the US, extending $300 unemployment benefits till September 6, sending $1,400 stimulus checks to eligible Americans, expanding child tax credits, providing aid to small businesses and state governments and more. The passing of the bill boosted markets early in the day, as it had been long awaited for the past few weeks and serves as the first major win of the Biden administration. Increase in spending is also allocated towards vaccinations, which are ramping up and Biden setting a goal for all adults being vaccinated by the end of May.

Unemployment

Better than expected job report shows recovering economy

The Labor Department released data for the week ended March 6 showing less than expected jobless claims, to a seasonally adjusted 712,000 vs expected 725,000. Continuing jobless claims continued to fall, alongside news that a vast majority of the population will be vaccinated in the near future. Strong hiring sprees amid a rapidly recovering economy added 379,000 jobs in February. Household spending has also risen due to the government stimulus checks and unemployment is down to 6.2% in February from a high of 14.8% in April 2020.

MORTGAGES

Mortgage rates continue to decline

Based on data provided, mortgage rates have declined again, especially the 10 year mortgage and refinancing rates falling, down 2% and 2.125% respectively. Both remain hovering around all time lows, as increasing amount of people are looking to buy new homes with the coronavirus pandemic seemingly coming to an end soon and a full economic recovery on the frontier. Despite this, mortgage refinance demand is down 43% from a year ago, while mortgage applications for home buyers rose 7% for the week, and is up 2% from the year prior. Rising interest rates are fears that are plaguing investors, but for the meantime, the general public remains optimistic as more people continue to borrow.

US MARKETS

Markets were up Wednesday following positive economic outlooks

US markets were up on Wednesday following Tuesday’s surge and tame inflation data. While rising Treasury yields and potential inflation worries current investors, positive economic data is easing these fears as the market shrugged off these worries. In addition, the US government announced Wednesday morning that February consumer price was up 0.4%, and certainly to be boosted in March and subsequent months due to the passing of the coronavirus stimulus package.

GE

General Electric announces sale of jet leasing business in merger with AerCap

Amid a struggling time for the aviation industry, GE on Wednesday announced they would be selling their jet leasing business to AerCap in a deal valued at $30 billion. The merger would give GE a 46% stake in the combined firm and reported to generate $24 billion in cash. The deal would streamline and combine GE’s GE Capital with the broader corporate structure of the entire conglomerate. The deal is set to reduce up to $30 billion of debt as both GE and AerCap were trading lower in the afternoon. This is following reports that S&P Global Ratings is planning on lowering the firm’s credit score due to higher than normal debt leverage due to the consolidation of GE Capital, which took massive blows during the financial crisis. The deal is a step forward for both companies, with increased market capitalization, consolidation of assets, debt reduction, and diversification into the aviation sector which many believe will rebound.

Works Cited

Belvedere, Matt. “5 Things to Know before the Stock Market Opens Wednesday.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/5-things-to-know-before-the-stock-market-opens-march-10-2021.html.

Fenske, Chris. “Daily Global Market Summary - 10 March 2021.” IHS Markit, 10 Mar. 2021, ihsmarkit.com/research-analysis/daily-global-market-summary-10-march-2021.html#:~:text=Most%20US%20equity%20markets%20closed,%2DNAHY%20%2D10bps%2F300bps.

Franck, Thomas. “Weekly Jobless Claims Rise Less than Expected with Biden Set to Sign $1.9 Trillion Covid Package.” CNBC, CNBC, 11 Mar. 2021, www.cnbc.com/2021/03/11/weekly-jobless-claims.html.

Jennings, Chris. “Today's Mortgage Rates Continue to Decline, Hover near Historical Lows: March 10, 2021.” Fox Business, Fox Business, 10 Mar. 2021, www.foxbusiness.com/money/todays-mortgage-rates-march-10-2021.

Josephs, Leslie. “GE to Merge Aircraft Leasing Unit with Rival AerCap in a $30 Billion Deal as Industry Faces More Pandemic Turmoil.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/general-electric-aercap-aircraft-leasing-merger.html.

Olick, Diana. “Mortgage Refinance Demand Plunges 43% from a Year Ago, as Higher Interest Rates Take Their Toll on Borrowers.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/mortgage-refinance-demand-plunges-43percent-from-a-year-ago.html.

Pramuk, Jacob. “House Passes $1.9 Trillion Covid Relief Bill, Sends It to Biden to Sign.” CNBC, CNBC, 10 Mar. 2021, www.cnbc.com/2021/03/10/stimulus-update-house-passes-1point9-trillion-covid-relief-bill-sends-to-biden.html.