US Stock Market Overview – Stocks Drop Led Down by Real-Estate; CPI Tumbles

US stocks were lower on Tuesday hovering between positive and negative territory for most of the trading session, and the diving into the close. Most sectors in the S&P 500 index were lower led down by Real-estate, consumer staples bucked the trend. The VIX volatility index rebounded after falling for 6^th consecutive trading session.

Stocks continue to wait for an impetus to move higher, as huge federal stimulus continues to buoy riskier assets. House Democrats released their latest bill Tuesday designed to blunt the coronavirus pandemic’s devastating effects on the economy. US CPI slumped more than expected tumbling the most since 2008. The US budget deficit surged in April as spending continued to surge.

Democrats Offer Up a Huge Stimulus Package

House Democrats released their latest bill Tuesday designed to blunt the coronavirus pandemic’s devastating effects on the economy. The House wants nearly $1 trillion in relief for state and local governments.  The second round of direct payments of $1,200 per person, and up to $6,000 for a household. About $200 billion for hazard pay for essential workers who face heightened health risks during the crisis $75 billion for coronavirus testing and contact tracing.  An extension of the $600 per week federal unemployment insurance benefit through January.

CPI Drops More than Expected

The US CPI declined by 0.8% in April as falling oil, weighed on the headline index. Also there were huge declines in air travel, which weighed on travel prices and services. Excluding food and energy core CPI decreased by 0.4%, the largest monthly drop in records dating to 1957. Overall prices were up 0.3% from a year earlier, the lowest since 2015, and core prices were 1.4% higher from a year ago, the lowest since 2011.

US Budget Deficit Surges

The U.S. reported a record $738 billion budget deficit in April. The surge in spending is due to the response to the Covid-19 pandemic. The deficit report was the first to take into account the massive spending implemented by the government to offset the negative economic impact of the stay at home orders which closed all non-essential businesses.