In last week’s vlog, we talked about several reasons why the market has come back so strong. Topics included the Federal Reserve and how accommodating they have been, a strong housing market, and better than expected corporate profits. This week we want to turn the attention to two important events that we are watching carefully that could possibly move the market this week and the rest of the year. The first one is a possible FDA vaccine approval. The market is moving on vaccine news so, with any good vaccine news, the market is going up. Last week, on Tuesday, we saw a temporary trade back when the news reported that there could be some distribution issues with the vaccine. We are watching the vaccine news very carefully because of this. The second and most important thing that we are watching is regarding fiscal stimulus.
We talked last week about how the jobs number came out and 245,000 jobs were added month-over-month, disappointing expectations. That was by far the weakest jobs number since the recovery started a few months back, however, the market rose on that news. Why is that? The reason is that we’re all watching for fiscal stimulus. When you are talking about numbers out of Congress in the trillion dollars plus range, that’s extremely stimulative to the stock market because that’s a lot of money being floated to the economy very quickly. Now that bill will eventually come due in the long-term, but in the short term, the market shows this as a positive thing. That’s why this bad news on jobs is good news for stimulus. It increases the chances that the stimulus payouts will happen sooner and will most likely increase the size of the stimulus. Globally, we crossed the milestone of $277 trillion in debt in 2020 which is an additional $15 trillion over 2019. It may take another trillion or so dollars to help bridge the gap to hopefully a more prosperous 2021. This stimulus could possibly happen before year-end so we’re watching for the news on that to hit this week. Also, we’re in the month of December where a lot of times tax strategies take place, tax-loss selling is done, and people start to readjust their portfolios to plan for 2021. So, there is a lot of information out there that we’re watching closely to keep our clients updated.
Friday, the S&P 500 closed right at 3,700 which pushed the resistance level to 3,790 and the support level to 3,580. This is something we’re watching right now, but the 90-day and 200-day moving averages are starting to firm up. The data can be perceived as showing a bullish tone in the market. One thing that we want to look at is the consumer. Is consumer optimism there? Is it going to stay there through the month of December and into next year? If so, will it continue into the spring months? We will keep an eye on consumer reports as news of the vaccine unfolds, talks of more stimulus continue, and consumer spending ramps up in these next few weeks as the holiday approaches.
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
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