Stimulus hopes again, Apple hits record highs, house prices soar

Wall Street higher on stimulus expectations

US stocks are rising once again on stimulus hopes.  The House passed the bill to increase stimulus payments from USD600 to USD2000, clearing the 2/3 majority needed for passage as 44 Republicans voted alongside Democrats.  The bill now goes to the Republican-controlled Senate and it is unclear what will happen next.  Senate Majority Leader McConnell will have to decide if he will present this bill for a vote.  Even if the effort for bigger checks fails now, the goalposts have been moved and the Biden administration will have a better chance of passing additional stimulus once he is inaugurated.

What complicates the stimulus debate is the upcoming Georgia Senate runoff races.  If a Senate vote is called, both Georgia Senators Perdue and Loeffler will have to decide if they support the president’s initiative to increase stimulus payments.  Unemployment remains elevated in Georgia, rising from 227,700 in October to 296,200 in November and that could motivate many to vote.

Risk appetite is limited as thin trading conditions persist and will likely consolidate unless the prospects of a stimulus stem out of the Senate.  The Senate might make a counteroffer and that could provide some upside for global equities.

Stocks pared some gains after Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, delivered cautious comments that the January levels of the virus could be worse than December.  The Christmas surge is expected to deliver the last peak of the virus and should raise expectations for more lockdowns over the next few weeks.

Apple shares rose to a record high as investors held off on the cyclical rotation trade.  The stay-at-home economy is still here and will be here for at least a couple more quarters.

The October S&P CoreLogic Case-Shiller index posted the largest increase in housing prices since 2014.  The 20-city report showed a 7.95% rise year-over-year as strong demand, tight inventories, and low rates keep the housing market on fire.  This housing data is rather old and did not yield any new insights for the bright spot of the US economy.

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