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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