US stocks diverge on Senate stimulus approval

US stocks got an initial boost early on Sunday after the Senate had a breakthrough with Biden’s USD1.9 trillion Covid relief bill.  The next step is for a House vote on the terms for the bill’s consideration, with a final vote possibly happening on Tuesday.  There was not a lot of stimulus momentum in Asia, however, and some of that could be attributed to Oprah Winfrey’s interview with Meghan and Harry.  The interview with the Duke and Duchess of Sussex dominated the media waves overnight as most of the big moves in equities, oil, and the bond market were faded.  Right now, Wall Street is in wait-and-see mode to see will the UK virus variant will disrupt the US short-term outlook and how realistic it is to believe Biden can get 10 republicans on board for infrastructure spending.

The US session has been all over the place.  The Senate passed Biden’s USD1.9 trillion COVID relief bill on the weekend and optimism that the bond market rout is near its end is helping drive back some risk-on flows to the cyclical rotation trade.  The major indexes can’t roar higher unless the love for big-tech returns.

Dow hits record high

Big-tech valuation concerns are not easing up anytime soon and Wall Street wants to continue to pile into blue chip stocks.  The Dow Jones Industrial Average rose to a record high as investors continue to bet that the US economy will outperform as Americans return a lot sooner to pre-pandemic behavior.  Infrastructure spending would be the ‘icing on the cake’ for the cyclical rotation trade.  Republicans will have to decide, do they want to win some political capital and help the Democrats get infrastructure spending done over the next couple of months or watch Democrats do it alone late in the year with the budget conciliation process.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya