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Stock futures rise as Federal Reserve expands lending programs

Stocks were poised to open higher on Monday after the Federal Reserve prepared to launch an expansion of lending programs in an effort to shield the economy from the coronavirus pandemic. 

Heading into Monday’s trading session, futures for the Dow Jones industrial average climbed 100 points, after briefly falling more than 5% overnight, triggering an automatic shock absorber. Standard & Poor’s 500 futures were virtually unchanged, paring losses after falling more than 3%. On Friday, stocks posted their worst week since the financial crisis.

The Fed said it plans to purchase an unlimited amount of Treasurys and mortgage securities in a bid to support financial markets. It also said that it would purchase commercial mortgage-backed securities.

The Fed also said it will purchase agency commercial mortgage-backed securities as part of an expansion in its asset purchases, known in the market as quantitative easing. 

“We’ve got a lot of promise from the Fed, but they’re still going to need help from Congress,” says Scott Colyer, chief executive at Advisors Asset Management. “Does the Fed’s latest move solve our virus problem? No. Does it solve our unemployment problem? No. But it does allow markets to function. At the end of last week, we were sorely in need of that.”

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