DECEMBER 22, 2020 – Coronavirus Vaccines and Relief Aid

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The Week on Wall Street

Stocks climbed higher amid the COVID-19 vaccine rollout and an improving outlook for a fiscal stimulus bill.

The Dow Jones Industrial Average, which has lagged all year, gained 0.44%. The Standard & Poor’s 500 picked up 1.25% while the Nasdaq Composite index surged 3.05%. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.44%.[1][2][3]

In a week that celebrated the national rollout of a COVID-19 vaccine, market enthusiasm was tempered by worries of infection caseload and fresh economic lockdowns.

Coronavirus Relief Package

On Monday night, Congress passed a $900 billion coronavirus relief bill that includes assistance for households and businesses, as well as funding for vaccine distribution, schools and more.

Here are some highlights of what is included in the legislation:

  • Establishes a temporary $300 per week supplemental jobless benefit for 10 weeks from December 26, 2020-March 14, 2021.
  • Includes stimulus checks of up to $600 per person for individuals earning $75,000 per year and married couples who earn up to $150,000, with $600 more for each dependent under 18 living in the same household.
  • Extends the Paycheck Protection Program (PPP) and adds deductibility for PPP expenses. Businesses experiencing severe economic impact will be eligible to apply for a second PPP loan. This time around, 501(c)(6) organizations (excluding unions) will now be eligible to apply, and the language codifies federal rules that ensures churches and other faith-based organizations are eligible to apply.
  • Includes $20 billion to purchase vaccines and provide them at no cost to those needing it.
  • Ends Federal Reserve emergency powers under the CARES Act and rescinds $429 billion in unused CARES Act funds provided for the Federal Reserve’s emergency lending facilities.
  • Extends several CARES Act unemployment programs that were scheduled to end on Dec. 31, 2020.
  • Extends and phases-out the Pandemic Unemployment Assistance (PUA) for self-employed workers to March 14 (at which time it will be closed to new applicants) through April 5, 2021.
  • Adds funding including $10 billion for grants to help childcare centers reopen, $82 billion to help schools and universities reopen, and $4 billion for substance abuse programs that have been set back by mandatory lockdowns.
  • Extends the eviction moratorium until January 31, 2021 and provides $25 billion in rental assistance for those who lost income due to the pandemic.

Fed Outlook on Economy Improves

The Federal Reserve on Wednesday concluded its last meeting of the Federal Open Market Committee for 2020. Fed officials provided more detail for its monthly bond purchase program and reiterated their commitment to a monthly purchase of $120 billion of Treasury and mortgage-back securities until its inflation and employment goals are met.[4]

The Federal Reserve also raised its outlook on the U.S. economy. It revised its September forecast of a 3.7% decline in GDP in 2020 to a 2.4% decline, and increased its 2021 GDP growth forecast from 4.0% to 4.2%. It also expects unemployment at 2020 year-end would fall to 6.7%, substantially lower than its earlier estimate of 7.6%.[5]

Final Thoughts

Our weekly market commentary will not be published next week. We would like to take this moment to wish you and your family a safe and joyous holiday season and happy, healthy New Year.

THIS WEEK: KEY ECONOMIC DATA

Tuesday: Gross Domestic Product (GDP), Consumer Confidence, Existing Home Sales.
Wednesday: New Home Sales, Consumer Sentiment.
Thursday: Durable Goods Orders, Jobless Claims.

Source: Econoday, December 18, 2020
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THIS WEEK: COMPANIES REPORTING EARNINGS

Tuesday: Cintas Corporation (CTAS), Carmax, Inc. (KMX)
Wednesday: Paychex, Inc. (PAYX)

Source: Zacks, December 18, 2020
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

[1] The Wall Street Journal, December 18, 2020
[2] The Wall Street Journal, December 18, 2020
[3] The Wall Street Journal, December 18, 2020
[4] The Wall Street Journal, December 16, 2020
[5] CNBC.com, December 16, 2020
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