Stocks turned positive Tuesday in part because investors hope Hurricane Harvey could unite Congress on its budget, closely followed trader Art Cashin told CNBC.
“I don’t want to call it a silver lining given the tragedy of what’s going on in Texas but there may be a little bit of bonus in the fact that everybody will want to get federal aid out to help these people that they desperately need and that could, in fact, open the door to cooperation on a budget and a few other things,” UBS’ director of floor operations at the New York Stock Exchange said Tuesday.
“They need to help these people and it would be foolish to act in a partisan way,” he added in the interview on “Squawk Alley.”
Cashin also said stocks rose because some investors bought the dip once they realized it is likely no immediate action would be taken on North Korea’s latest missile launch.
“People began to realize that, unfortunately, we don’t have any real options here,” Cashin said. “Any action would be not immediate. … That pretty much brought us back.”
It doesn’t mean the market doesn’t have any fear, Cashin added.
U.S. stocks regained their footing in intraday trading Tuesday and the Dow Jones industrial average erased earlier losses to trade modestly higher. The Dow opened 100 points lower as investors evaluated tension between the U.S. and North Korea after the isolated nation fired a missile over Japan.
Meanwhile, Congress faces a series of fiscal deadlines before the end of next month, including passing a bill to fund the government which would avert a government shutdown and a default on the national debt.
President Donald Trump on Monday promised federal assistance to parts of Texas and asked Congress to move quickly on a multibillion-dollar recovery package.
Regarding the market’s recent resilience, Cashin said investors aren’t optimistic but are hopeful and have Trump’s business-friendly legislation on their Christmas list.
“Out of this terrible tragedy in Houston, there’s a chance that cooperation will put them together,” he said.