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Stocks were heading higher again on Friday, after a turbulent week in which President Trump injected confusion into talks between the Treasury Department and Congress on the prospects of a broad stimulus bill, to aid small businesses, local governments and out-of-work Americans, halting them and then restarting them again.
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On Wall Street, the S&P 500 climbed nearly 1 percent, on track to end the week with a gain of more than 3 percent.
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The gains on Friday came as Speaker Nancy Pelosi said in a television interview that she hoped a deal would be reached soon, and Larry Kudlow, who advises the president on economic policy, said Mr. Trump had “approved a revised plan.”
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But also on Friday, the Senate Majority leader, Mitch McConnell, cast doubt on the likelihood for a deal when he said the prospects for more aid were unclear, with the election just weeks away.
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The mixed messages were just the latest in a tumultuous week in which Mr. Trump called off talks only to reverse himself two days later. That has left investors hopeful, but uncertain about the prospects for a deal.
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Some investors have begun to look past the short-term uncertainty of whether an agreement will be reached before the election, instead focusing on the potential for a “blue wave” that sweeps Democrats into power and enables former Vice President Joseph R. Biden Jr. to enact a much larger stimulus spending plan.
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The outcome of the first debate between Mr. Trump and Mr. Biden increased “the odds of first, Joe Biden becoming president, but also in line with the Democrats also taking the Senate,” said Shahab Jalinoos, global head of macro strategy with Credit Suisse in New York. “That’s obviously been a tailwind for markets since.”
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The focus on another round of support from Washington comes as the number of virus cases around the world rises, and the recovery in major economies — including the United States — show signs of losing steam. Britain on Friday said its gross domestic product rose 2.1 percent in August over the month before, less than expected and the smallest monthly increase since the economy started expanding again in late spring. The British economy is still 9 percent smaller than it was before the pandemic.
What hopes remained that Europe was recovering from the economic catastrophe delivered by the pandemic have all but disappeared as the lethal virus has resumed spreading rapidly.
France, Europe’s second-largest economy, this week amplified the concern as the government downgraded its forecast pace of expansion for the last three months of the year from an already minimal 1 percent to zero. Overall, the statistics agency predicts the economy will contract by 9 percent this year.
The diminished expectations are a direct outgrowth of alarm over the revival of the virus. France reported nearly 19,000 new cases on Wednesday — a one-day record, and nearly double the number seen the day before. The surge prompted President Emmanuel Macron to announce new restrictions, including a two-month shutdown of cafes and bars in Paris and surrounding areas.
In Spain, the central bank governor this week warned that the accelerating spread of the virus could force the government to impose restrictions that would produce an economic contraction of as much as 12.6 percent this year.
The European Central Bank’s chief economist on Tuesday cautioned that the 19 countries that share the euro currency may not recover from the disaster until 2022, with those that are dependent on tourism especially vulnerable.
Summer increasingly feels like a distant memory.
In August, with infection rates down, lockdowns lifted, and many Europeans indulging in the sacred ritual of the summer holiday, signs of revival were abundant. Many European economies expanded…
Read More: In Europe, Hopes for an Economic Recovery Are Fading: Live Updates