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.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.