The economy is about to run hot now that Washington DC is closer to delivering President Biden’s COVID relief bill and now that the US seems poised to easily start delivering over 2 million daily COVID vaccine shots. US growth exceptionalism will grow even further now that Merck, a fierce competitor for J&J, will help them make their COVID vaccine.
Recent economic data (retail sales, durable goods, ISM) has mostly impressed, providing a high baseline for the economy to take off once reopenings occur. Pricing pressures remain a big risk, but right now the bull market thesis for US stocks remains firmly in place.
US stocks are trading lower as Treasury yields fluctuate and investors try to figure out if Biden’s COVID relief bill will remain intact at the USD1.9 trillion price tag and if Senator Warren’s wealth tax gains traction.
Target and Kohl Earnings
Wall Street was unfazed by strong results from Target and Kohls. The US consumer is strong, and retailers will continue to thrive once the next round of stimulus checks hit American bank accounts later this month. Target crushed earnings and investors loved hearing a surprised CEO on how strong traffic was in January. Target had strong digital sales and saw comp sales rise 20.5%, much higher than economists’ forecast of a 17.5% gain. Target remains a favorite retailer for many trading portfolios. Kohl’s posted strong earnings and in-line revenue, with an upbeat outlook. Kohl’s is under activist scrutiny and will need to perform a lot better to avoid sweeping changes to the board.
The Dow is slightly down on the day as material and financial stocks rally. Dow Inc, the basic materials company is rising after Wells Fargo upgraded their view on strong demand and supply impact from the Winter Storm Uri. Big-tech is mixed with Amazon and Facebook holding onto modest gains, while the rest of the FAANG stocks are softer.
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