Over the weekend, congressional and White House plans for a quick bailout of companies crushed by coronavirus and a quick mail-out of cash checks to employees stuck at home and unable to earn wages fell apart.
With recession fears looming, but several Republican senators stuck in self-quarantine and Democrats generally unsupportive, the coronavirus stimulus bill failed to pass a vote in the Senate late Sunday -- and industrial stocks are getting pummeled in response. In early trading Monday, shares of Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) and Lockheed Martin (NYSE:LMT) both tumbled more than 5%, and Harley-Davidson (NYSE:HOG) fell more than 10%.
As of 10:45 a.m., Berkshire shares remain down 3.7%, Lockheed 4.3%, and Harley 7%.
Senate Minority Leader Charles Schumer explained the Democrats' opposition thusly: The Republican-sponsored bill contained a "large corporate bailout with no protections for workers and virtually no oversight." Sen. Schumer predicts a different deal can be reached today, but says that as of Sunday evening there were "still too many problems in the proposed legislation."
Meanwhile, House Democrats are pushing forward with a different bill, one that will "add protections for workers, to expand unemployment insurance to four months at 100% pay and increase aid to hospitals, state and local governments," reports The Wall Street Journal, but one that House Speaker Nancy Pelosi says will still be compatible with the $1.3 trillion deal still stuck in the Senate.
Reconciling two competing bills could, however, take more time than simply passing one in one house and having the other approve it. With the S&P 500 currently down "only" 2.4% on the weekend's disappointing news, I'm actually surprised the reaction among investors isn't more negative than it has been -- but even so, time's a-wasting.
The longer this process drags out, the steeper I would expect today's stock slide to become.