US market review: Biden signs Covid Relief Bill into law

Investor sentiment in the US was buoyed during March as President Biden’s American Rescue Plan was approved and signed into law. The US$1.9 trillion Covid relief bill will make direct payments worth US$1,400 to 85% of all US households, extend unemployment insurance, and is expected to provide a substantial boost for the country’s economy.


  • The American Rescue Plan is expected to have a global impact
  • The Fed reiterated its pledge of support for the US economy
  • The US labour market showed signs of picking up

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Investor sentiment in the US was buoyed during March as President Biden’s American Rescue Plan was approved and signed into law. The US$1.9 trillion Covid relief bill will make direct payments worth US$1,400 to 85% of all US households, extend unemployment insurance, and is expected to provide a substantial boost for the country’s economy.

“Fed policymakers do not expect to tighten rates until at least 2024”

The Organisation for Economic Cooperation & Development (OECD) expects the US economy to grow by 6.5% this year and 4% next year, supported by President Biden’s new package of stimulus measures; nevertheless, the OECD warned that the economic stimulus could stoke inflationary pressures. The package is expected to have a global impact: the OECD estimates that it will lift economic growth by up to half a percentage point in the euro area and China and by up to one percentage point in Canada and Mexico.

The Dow Jones Industrial Average Index rose by 6.6% during March, while the S&P 500 Index climbed by 4.2%, and both indices hit new all-time highs during the month. In comparison, the technology-rich Nasdaq Index rose by a relatively muted 0.4%. Over March, the best-performing S&P industry sectors were utilities, industrials and consumer staples, whereas sectors such as information technology, energy, and communication services performed relatively poorly.

After a lacklustre January, 379,000 new jobs were added to the US economy during February as companies in the leisure and hospitality sector hired new staff. Businesses appear to be drawing confidence from falling Covid-19 infection rates, and expanding vaccination programme, and the prospect of further economic relief. The rate of unemployment eased from 6.3% to 6.2%, although it remains well above its pre-pandemic level of 3.5% in February 2020.

The Federal Reserve (Fed) reiterated its pledge of support for the US economy, and Fed Chair Jay Powell insisted the central bank would not “take our eye off the ball before we actually finish the job”, warning: “The recovery has progressed more quickly than generally expected … while we welcome these positive developments, no one should be complacent”. Fed policymakers do not expect to tighten rates until at least 2024. The Fed upgraded its forecasts for economic growth in the US from 4.2% to 6.5% in 2021. Consumer price inflation is predicted to reach 2.4% this year, before subsiding next year, and the rate of unemployment is forecast to fall to 4.5%.


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