There’s now some serious talk about stimulus checks and some surprisingly low jobless claims coming in, Wall Street is looking optimistic. The markets rose on Thursday in response to this optimism, with corporate earnings over the past week assuaging fears that the markets could be volatile.
According to the Labor Department, only 779,000 people applied for jobless claims last week, compared to 812,000 people the week before.
According to early reports, private payroll increased more than expected in January. Many investors are looking ahead hopefully to Friday’s monthly employment report from the federal government. Now, the markets are cautiously optimistic, with investors waiting to hear what kind of news comes out of the Capitol with regards to stimulus spending.
Stimulus Spending Will Likely be Huge
President Joe Biden’s team has been adamant that they fear going “too small” on legislation, not too large. The administration has resisted calls from Republican lawmakers to taper back on the price tag of the massive $1.9 trillion spending package.
However, since Democrats control the Senate and the House, there’s little Republicans could do to stop them from simply pushing the bill through without them.
Such a bill is likely to include direct payments of $1,400 to Americans, which could, in turn, lift retail earnings for the first quarter. However, it could also lead to another run of social media-driven investing in so-called “meme stocks,” like what was seen with GameStop and AMC recently.
Retail Investing Cools Off
Speaking of GameStop, the frenzy around that stock has calmed slightly, with the stock ending up around ten percent down on Thursday morning. U.S. Treasury Secretary Janet Yellen has stated that the government wants to better understand what, exactly, happened with the GameStop rally before making any regulatory decisions.
It’s unclear what, if anything, could be done to regulate such moves. Some have speculated that regulations could include some limits on short selling, or else some kind of hold on stocks that are being short-squeezed. Such moves need to be weighed against the court of public opinion, too: many amateur investors have framed this battle as “David and Goliath,” and would see any moves protecting hedge fund investors as a pro-establishment jab at the average person.
eBay and PayPal
Online sellers have been having a banner year. The pandemic has wrought havoc in the markets, but online shopping has remained strong. This, in turn, led to historic levels of online shopping through the 2020 holiday season, giving eBay and PayPal both massive rallies coming into the new year. Each jumped upwards of 8 percent, a jump they both intend to ride through into success in the first quarter of 2021.
Meanwhile, on the other side of the coin, Qualcomm fell just over eight percent due to the shortage of semiconductors that has plagued the electronics industry recently. This shortage has seen everything from smartphones to PlayStations have steep stocking issues. There have been no new lows recorded across the S&P or Nasdaq indexes, and both have recorded numerous new highs. Investors are hopeful that this is the start of a new rally as relief checks begin rolling out.