U.S. stock futures smashed into “limit down” trading curbs in their first hour of trading Sunday night after Democrat pushed back against economic rescue measures on Capitol Hill.
Futures contracts on the Dow Jones Industrial Average and S&P 500 fell by 5 percent, triggering downside limits that prevent the contracts from trading 5 percent below the prior close. The limits are intended to prevent panicked sell-off and ensure orderly markets but they can obscure market signals by concealing selling pressure until the opening at 9:30 a.m.
The Nasdaq was down by almost 5 percent.
Traders appeared to be reacting to developments in Washington, D.C. House Speaker Nancy Pelosi, the California Democrat, said Sunday afternoon that she rejected the idea of working on the plan in the U.S. Senate supported by Republicans and the White House. She said she would instead move forward with her own economic package.
The Senate on Sunday night failed to advance its economic rescue bill, with lawmakers voting 47 to 47 on a procedural vote that required 60 votes to move the bill forward. Five Senators were not present to cast votes because they are self-quarantined due to coronavirus concerns.
Democrats have accused Republicans of rushing the process. Roll Call reported:
The vote had been delayed by three hours Sunday amid deepening rifts over the massive economic stimulus package, with Democrats expressing frustration that GOP leaders were rushing on a measure that they said didn’t do enough to help workers and was too generous toward corporate interests.
Few outside of Washington view efforts to pass an economic rescue package as rushed. Many economists have stressed the need for a swift government reaction to the extreme economic stress created by the coronavirus pandemic.