The “Lock-Down Trade” Reappears

The good news is that Congress finally came to an agreement on another stimulus bill. Treasury Secretary Steven Mnuchin said that stimulus checks could go out as soon as next week.

The bill would extend aid to millions of struggling households through stimulus checks, enhanced federal unemployment benefits and money for small businesses, schools and child care, as well as for vaccine distribution. It also repurposes $429 billion in unused funds provided by the Cares Act for emergency lending programs run by the Federal Reserve.

For Wall Street, the stimulus is already old news. I think some agreement was assumed several weeks ago. The stock market slipped early this morning on worries of a new virus strain in the U.K. Within minutes, the S&P 500 was down nearly 2%.

Once again, we saw the “lockdown trade” take shape. This was the pattern that was so prevalent earlier this year; travel stocks like airlines, hotels and vacation businesses took a big hit. Meanwhile, the stay-at-home and financial stocks did the best, or least-worst.

The stock market hit its lowest before 10:30 and it’s been making back lost ground since then. The Dow is already positive. FactSet is doing poorly today despite a good earnings report.

Posted by on December 21st, 2020 at 1:46 pm


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