What sectors will benefit from the $1.9T stimulus bill?

Consumer Discretionary stocks have typically performed well 3 months after a massive US stimulus bill is signed into law.

March 12, 2021

On Thursday, President Joe Biden signed the $1.9T COVID bill into law, per CNBC.

(The president will also instruct states to make all adults eligible for the vaccine by May 1.)

The key items in the bill include:

  • Direct payments of up to $1.4k
  • An extended unemployment supplement of $300/week
  • Funds for vaccine distributions

How might the stock markets respond to the historic bill?

One way to find out is to study the past.

Financial analytics firm Toggle AI looked at the performance of US stocks after 5 other historic stimulus bills:

  • 2001: Economic Growth and Tax Relief Reconciliation Act
  • 2008: Economic Stimulus Act
  • 2009: American Recovery and Reinvestment Act
  • 2017: Tax Cut and Jobs Act
  • 2020: CARES Act

Its analysis shows that Consumer Discretionary is the top-performing S&P 500 sector 3 months after these bills are signed into law.

When the cheddar hits, investors look to anticipate significant consumer spending and have historically targeted names like Nike, Starbucks, Home Depot, Target, and McDonald’s (’cause nothing says “pent-up demand” like people crushing Big Macs).

Which sector has historically been the loser? The boring old Utilities sector, with an average return of -3.3% over this span.

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