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Profit from the Pros By Kevin Matras Executive Vice President
Stocks Up As Earnings And Stimulus Come Into Focus
Image: Bigstock
Stocks closed up yesterday, but off their highs.
The stimulus roller coaster continued. After the Speaker gave a 48-hour deadline for a deal over the weekend (which would've expired Tuesday night), she said yesterday that she was "optimistic" that a deal could be reached in the coming days.
This back and forth has gone on for months with nothing concrete to show for it. But the Speaker and the Treasury Secretary continue to talk. However, even if they strike a deal, it will have to get passed in the House and the Senate. And that's up in the air as well. But the market would like to see something. And there's political pressure on both sides to get something done. So we shall see.
In the meantime, the economy continues to improve.
And that was underscored with yesterday's Housing Starts and Permits report. While starts missed the consensus with 1.415 million units (annualized) vs. views for 1.463 million, it nevertheless marked a 1.9% m/m gain, and an 11.1% y/y increase. Single family homes were the big driver with a 22.3% surge, while the volatile multi-family segment declined by -16.3%. But housing has been a star performer this year. And with rates at historic lows, that's expected to continue for quite some time. That was clear from the permits stats which came in at 1.553 million units vs. views for 1.520 million for a 13-year high!
We also saw gains in retail sales as well via the Redbook report. Same store sales were up 2.5% y/y vs. last month's snapshot of 1.2%.
Earnings season should also be a bullish catalyst for the market as well given that stocks typically go up during earnings season.
We'll get another 417 companies reporting earnings this week. Another 1,095 companies next week. And 1,894 companies the week after.
Let's also not forget the unprecedented growth forecast for the remainder of the year (35% Q3 GDP, and double-digits again for Q4), along with 2021 expected to grow at the fastest pace in 38 years!
These are exciting times for the economy and the market.
So make sure you're taking full advantage of it.
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
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