US Close: Stocks diverge, Markets await US CPI data, DC debates Biden’s Bill and Debt Ceiling

US stocks were initially boosted on optimism that house Democrats were only going to deliver a modest tax increase and as some hedge funds threw in the towel with their bearish bets on technology stocks.  Today, was a big day for many New Yorkers as schools opened.  The success of schools staying open over these next few months could be the key for whether the economy reaches further substantial progress in the labor market recovery.  The stock market rebound however was short-lived after COVID vaccine stocks plunged after the Lancet publication suggested most people don’t need a booster shot.  Pfizer, Moderna, and Johnson & Johnson shares all sold off.  Investors don’t want to have massive positions before the inflation data as the risks are to the upside as COVID inflation continues to hamper supply chains.  If inflation comes in hotter-than-expected, taper expectations could shift from December to November.

The drama unfolding in Washington DC over Biden’s $3.5 trillion economic package and the debt ceiling will be dragged out over the next couple of weeks.  Eventually the Democrats will get their conservative members on board, but perhaps the plan’s size falls to $2.5 trillion.  Optimism is high that Congress will deliver infrastructure and a spending plan over the next few weeks.  Despite another Chinese tech crackdown, risk appetite is minimally dragged down.  Wall Street is getting more pessimistic over the short-term and that might be what is needed to help get stocks back into their record setting mode.

The S&P 500 index finished 0.36% higher and the Nasdaq barely eked out a gain at 0.06%, while the Dow Jones Industrial Average outperformed with a 0.76%rise.

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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