President Donald Trump signed a $900 billion Covid 19 relief bill into law, averting a government shutdown and extending unemployment benefits to millions of Americans. The signing came days after Trump suggested he will veto the legislation, demanding $2,000 direct payments to Americans, instead of $600.
All the bluster neither significantly changed to outlook for stocks, as markets still expected (and ultimately received) stimulus of a minimum of $900 billion to pass, wrote Tom Essaye, founding father of The Sevens Report.
The five pillars of the rally (Federal stimulus, FOMC stimulus, vaccine rollout, divided government and no double dip recession) re-main largely in place, and until that changes, the medium and longer term outlook for stocks will be good, Essaye included.
Apple led the Dow higher, rising 2.5 %. Tech and supplies had been the best-performing sectors in the S&P 500, gaining 0.9 % along with 0.8 %, respectively.
Wall Street is coming off a quiet holiday week where the major averages had been flat. The S&P 500 fell 0.2 % last week as several investors got the chips off to the year end. The 30 stock Dow eked out a 0.1 % gain for the same period.
Profit-taking might ramp up in the final week of the year, that has up to this point seen surprisingly good returns. The S&P 500 has acquired 15.4 % year to date, while the Dow has climbed 6.4 %. The Nasdaq has soared 43.2 % this season as investors favored high growth technology labels while in the continuing Covid 19 pandemic.
Dr. Anthony Fauci warned on Sunday that the country may see a surge in new Covid 19 infections following Christmas and New Year’s celebrations. Two vaccines by Moderna and Pfizer have begun the distribution process this month. And so far more than one million people in the U.S. have been vaccinated.