Stock market stumbling as further US stimulus is in doubt
S&P 500 is off 9% from its peak earlier this month
US Federal Reserve Chairman Jerome Powell testified before Congress this week that additional fiscal stimulus was probably needed to support the recovery. But many market watchers doubt such a package can be passed before the election, and the S&P 500 Index has fallen 9% off its peak on 2 September (see chart above). The Democrats in Congress are now working on a new USD 2.4 trillion aid package, but this is still far above the size the White House has indicated it would approve (New York Times). In addition, COVID-19 cases are beginning to rise in the US. With real demand threatened by both renewed lockdown measures and struggling households cutting back on spending, the US will likely purchase fewer foreign goods. This could result in falling imports from Asia, and declining regional factory utilization rates. Demand for petchem feedstocks and tonnage in Asia could also wane in Q4.