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Last week, U.S. markets posted their best showing in months. This, on the heels of stock indices dropping so much the prior week that investors feared another bear market was in the offing. By the end of last week, the Dow Jones Industrial Average rose approximately 4% as the S&P 500 and Nasdaq rose about 3%.

There was no shortage of good news as the President signed a record-setting $1.9 trillion stimulus bill. Analysts know what the previous round of stimulus spending did for the economy and stock market. This time, the results are expected to be even more stimulating (no pun intended).

Analysts are expecting certain areas of the economy and stock market to benefit greatly from the fiscal stimulus. Consumer stocks, financials and energy are all expected to improve going forward. This is important because tech stocks have benefitted greatly from the great lockdown as workers and students spent money on computers, software and a host of other techie gadgets. Will this be the time the tech-heavy Nasdaq levels off or even continues to slide? Only time will tell. For now, we’ll watch and report on how things progress from this point.

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The Markets and Economy

According to Oxford Economics, the world economy is expected to grow about 6% in 2021, the fastest rate in almost half a century. For the first time since 2005, the U.S. is expected to make the largest contribution to global growth…even more than China.
On a similar note, the Organization for Economic Cooperation and Development reported that a surprisingly strong surge in U.S. growth will drive a sharp rebound in the world economy this year. However, the OECD warns that this growth could hamper growth prospects in developing economies.
Pandemic harder on renters. According to the Consumer Finance Protection Bureau, just one in 39 homeowners was at least three months behind in their mortgage payments as of the end of 2020. However, one in five renters was at least three months behind in their monthly rent.
A month after the 2020 tax season started, Congress is about to make changes that could potentially cause those who have already filed to refile an amended return. The changes deal mostly with the amount of unemployment benefits that would be exempt from taxation.
A record-setting virus-relief bill was signed by President Biden last week. The historic $1.9 trillion package includes expansion of unemployment benefits, money for states and fiscal stimulus checks for many taxpayers.
As the U.S. economy continues to rebound, consumer prices are slowly rising. The consumer-price index rose a seasonally adjusted 0.4% in February.
Following a “cease-fire” over the trade war with China, American farmers are exporting record amounts of crops and meat across the Pacific.
U.S. homeowners pulled more cash from their properties through “cash-out” re-financings in 2020 than any time since the financial crisis.
Household net worth ended 2020 at the highest level on record. The Federal Reserve reported that the $130.2 trillion in total net worth of American families was up 10% from the end of 2019.

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The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Consult your financial professional before making any investment decision. You cannot invest directly in an index. Past performance does not guarantee future results.

Note: All figures exclude reinvested dividends (if any). Sources: Bloomberg, Dorsey Wright & Associates, Inc. and The Wall Street Journal. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

Securities offered through Triad Advisors, member FINRA/SIPC. Investment advice offered through Resources Investment Advisors, LLC, an SEC-registered investment adviser. Resources Investment Advisors. LLC and Vertical Financial Group are not affiliated with Triad Advisors.

David Kover on March 16th, 2021

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Stimulus Spending Takes Center Stage