No stimulus, no problem as the
Dow Jones Industrial Average
surge more than 350 points on Monday. It was almost as if stimulus happened.
Except, of course, it didn’t. Instead, the Dow Jones Industrial Average gained 357.96, or 1.3%, after President Donald Trump signed an executive order extending unemployment benefits and putting in a place a payroll-tax holiday. It’s not a stimulus package, but it might not need to be, explains Oanda’s Edward Moya.
“Following President Trump executive orders over the weekend, expectations should be high that Congress gets their act together and reach a more comprehensive fiscal package for the economy,” he writes.
A quick look at the Dow tells you that’s probably what’s going on. Economically sensitive stocks like
(DOW) gained more than 5%, while
(MSFT), the Dow’s worst performer dropped 2%. The tech-heavy
But there’s another reason stocks are holding up: This is the best earnings season ever, at least versus expectations.
profits are still down, with 90% of the index reporting, companies have topped expectations by 17%, according to BofA Securities research, the biggest beat ever. Some 59% of companies have topped earnings and revenue expectations, also a record.
The question now: Can it last? We’ve seen investors start to shift out of tech and growth into cyclicals before, only to be disappointed. Will this time be any different? In some ways, it might not matter. After all, most investors are long portfolios that look like the
not the Dow or the Nasdaq, and the index, which gained 0.3% on Monday, has shown it can keep inching higher no matter whether its tech or anything else that does the heavy lifting.
And with the index just 0.8% away from an all-time high, we wouldn’t have it any other way.
Write to Ben Levisohn at Ben.Levisohn@barrons.com