Biden’s proposal, called the American Rescue Plan, includes increasing the additional federal unemployment payments to $400 per week and extending them through September, direct payments to many Americans of $1,400, and extending the federal moratoriums on evictions and foreclosures through September.
“There is real pain overwhelming the real economy — the one where people rely on paychecks, not investments, to pay for their bills and their meals and their children’s needs,” Biden said during a speech in Delaware Thursday night.
Savita Subramanian, Bank of America’s head of U.S. equity strategy, said on CNBC’s “Fast Money” that the additional government spending is part of the reason that the market leadership could shift from tech stocks to cyclical stocks in 2021.
“We’ve got this petri dish where everything that was good for tech and secular growth is starting to change,” Subramanian said.
The announcement comes after a quiet day on Wall Street, where the three major indexes finished with slight losses after tech stocks faded late in the session. Anticipation of the stimulus deal was reflected in other areas, however, as the more economy dependent Russell 2000 rose more than 2%.
A third major relief bill has been widely expected in recent weeks, especially after the December labor market report saw the economy lose jobs and Democrats won two key Senate races in Georgia, giving Biden’s party narrow control of both houses of Congress.
Another spending bill, focused on climate change and infrastructure among other initiatives, is expected to be introduced in February, according to senior Biden officials.
It remains unclear whether Biden’s proposal will be welcomed in a sharply divided Congress. Though Democrats hold both houses, they will need to sway moderate members of their own party, such as West Virginia Sen. Joe Manchin, and some Republicans to increase spending. Democrats originally pushed for another multi-trillion package last year before agreeing to a $900 billion bill in December.
— CNBC’s Thomas Franck contributed to this report.
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