A roughly $900 billion stimulus package will help shore up the economy until spring and give the medical community more time to tackle the latest wave of COVID-19. The package includes expanded unemployment benefits, direct payments to individuals and families, funding for COVID-19 contact tracing and vaccine deployment, and aid for small businesses, hospitals, schools and colleges, live entertainment venues, and airlines.
Economy losing momentum
The recent economic calendar provided further evidence that the economic recovery has lost steam due to restrictions to curb the spread of COVID-19 in the United States. Jobless claims have risen for two straight weeks, retail sales fell for the first time since April 2020, and the index of leading economic indicators has shown small gains (source: Conference Board). The stimulus package takes on even greater importance with the news of a new strain of COVID-19 in the United Kingdom that will lead to additional travel restrictions, reduced mobility, and business closures.
Federal Reserve threads the needle
The Federal Reserve (Fed) concluded its final policy meeting of the year on December 16, keeping its policy rate unchanged at a target range of 0–0.25%. It also sharpened its guidance on how long its bond purchase program, also known as “quantitative easing,” would continue. Market participants were initially disappointed that the Fed didn’t do more, but Fed Chair Jerome Powell made a strong case in his press conference that the change was substantive.
Remarkable 2020 market statistics
2020 was a remarkable year for financial markets. For example, 2020 will be the first time in which the S&P 500 Index ended a year positive after being down more than 30% at any point during the year. Listen to Market Signals for more 2020 market highlights.
Thank you to our loyal listeners for tuning in during a very tumultuous year. Our next LPL Research Market Signals podcast will be recorded January 4, 2021.
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References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
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All index data is from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This Research material was prepared by LPL Financial, LLC.
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