- Stocks, oil, and bitcoin rallied on Tuesday as investors cheered the Federal Reserve’s sweeping stimulus measures.
- The central bank pledged to buy Treasuries and other assets “in the amount needed,” and roll out credit facilities for consumers, businesses, and towns and cities.
- “The risk is that these policy measures are as addictive as opioids, and that the cure turns out to be worse than the disease,” one analyst cautioned.
- The Senate’s failure to agree on an economic relief package for a second day weighed on market sentiment.
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Stocks, oil, and bitcoin rallied on Tuesday after the Federal Reserve unveiled a sweeping set of measures to shore up the US economy against the novel coronavirus. However, investors’ enthusiasm was tempered by the Senate’s failure to advance a major stimulus package for a second day on Monday.
The central bank committed to buying Treasuries and mortgage-backed securities “in the amounts needed” to shore up markets and underpin its monetary policy. It launched three new credit facilities to provide $300 billion in new financing to large employers as well as consumers and businesses. It also expanded two credit facilities to help towns and cities access credit, and intends to set up another lending program to support small- and medium-sized businesses.
“The Fed pulled out the heavy artillery,” Ipek Ozkardeskaya, senior analyst at Swissquote, said in a morning note.
However, Senate Democrats continued blocking Republicans’ relief package as they pressed for greater transparency regarding which corporations receive the funds as well as restrictions on how they can use them. They also pushed for unemployed workers, hospitals, and others to receive more cash.
Coronavirus — which causes a flu-like disease called COVID-19 — has infected more than 378,000 people, killed at least 16,500, and spread to upwards of 160 countries and territories. It has…