The Checks Are (Nearly) in the Mail

By Alex Eule |  Monday, December 28 It's Official. For months, a stimulus package felt as if it was just around the corner. But that corner kept getting pushed down the road. Even once the stimulus package passed Congress last week, the wait continued.  But over the weekend President Donald Trump finally decided to sign the bill. The law sends $600 payments directly to consumers, expands unemployment insurance, and provides support to small businesses. It's the bridge many were hoping for until a vaccine is widely distributed and the economy approaches a new normal.  Sure enough, stocks jumped at the open this morning and stayed strong throughout the trading session. The Dow Jones Industrial Average finished the day up 204 points, closing at another all-time high. The large-cap S&P 500 and the tech-heavy Nasdaq Composite also closed at all-time highs. In a year of milestones and surprises for stocks, another one is on the way: The Dow Jones data team notes that the S&P 500 is on track for the best-ever close to the year, based on its November and December performance. During the two-month stretch, the index is up 14.2%. For the Dow -- up 14.9% in November and December -- it's the best year-end stretch since 1928. The Nasdaq is up 18% and having its best year-end performance since the tech bubble in 1999.  So with the long-awaited stimulus bill finally sealed, what do investors have to look forward to next? Luckily enough earnings season is just around the corner; the banks begin to report on Jan. 15. This earnings season could be particularly important. It's the best chance yet for executives to opine on our post-vaccine world. Work-from-home trends have remade the workforce in short order, and it will be fascinating to hear how managers plan to move forward once it is safe to return to physical offices. It's not simply an emotional question -- there's a significant financial impact at stake. In a note to clients today, strategists at Glenmede noted that higher productivity is likely to be one result of the "next normal." The pandemic has changed the landscape for how businesses operate and many that needed to adapt to a work-from-home setting have realized substantial benefits. Time lost commuting and capital allocated for physical spaces are just a few inefficiencies that have been mitigated by working remotely. Remote work has even allowed for the first increase in productivity during a recession in recent memory. Investors have grown fond of pitting reopening stocks (Macy's and American Airlines) against stay-at-home ones (Peloton and Zoom Video). But the popular trade was never so clear cut. If working from home has long-term profit-margin benefits, it may be one part of the Covid economy that executives and investors are glad to keep around.

 

DJIA: +0.68% to 30,403.97 S&P 500: +0.87% to 3,735.36 Nasdaq: +0.74% to 12,899.42 The Hot Stock: Ulta Beauty +5.1% The Biggest Loser: Etsy -6.4% Best Sector: Communication Services +1.8% Worst Sector: Energy -0.6%