This second round of stimulus is smaller than the package passed earlier in the year. Individuals will get just $600 in stimulus checks, half the amount passed in March. But investors will keep a positive outlook on stocks and the economy so long as the money printer goes ‘brrrrrr:”
“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, founder 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 positive,” Essaye added.
The 10-year U.S. Treasury yield increased to 0.95% in sign that investors are willing to move into riskier assets like stocks.
Apple (AAPL) has been the big winner of the day, seeing it’s shares rise over 3%. Goldmans Sachs (GS) and Disney (DIS) also did well, both gaining over 2% so far. Speaking of Goldman, its chief economist Jan Hatzius raised his 2021 first-quarter GDP estimate from 3% to 5% after President Trump signed the two spending bills.
The markets love stimulus. So long as the money spigot stays open, investors think stocks will keep climbing.