By Kim Khan
Investing.com - Congress really managed to take the wind out of Wall Street’s sales today, with some frantic selling into the close. The Dow was looking like it could add another 1,500 points to Tuesday’s haul of more than 2,100, but closed up 495.
But when it comes to the coronavirus stimulus package, the adage of buy-the-rumor-sell-the-deal seems to have transformed into buy-the-expectation-sell-execution.
It looked like the market was ready to get into the nitty gritty by tomorrow morning at the latest, but new sticking points have arisen.
If it weren’t for stimulus uncertainty, unemployment data would’ve likely been the biggest driver. And there are corporate numbers coming from the housing sector.
Here are thee things that could move the markets tomorrow.
1. Stimulus Vote (the Waiting Game)
A Senate vote on the $2 trillion fiscal package could still come tonight, but Republicans and Democrats seem to be digging in.
Three GOP Senators want to change language in the package regarding unemployment that they believe gives people an incentive to remain out of the workforce. Sen. Bernie Sanders is now demanding more strings on money for corporations if the Republican demand isn’t dropped. (They had an excellent word for this in “Too Big to Fail” if you’re looking for streaming content these days.)
Even if the Senate passed the bill tonight, the House still has to vote tomorrow. That was expected to sail through with unanimous consent, but CNN reported shortly before market close that Rep. Alexandria Ocasio-Cortez may oppose the resolution.
2. Jobless Claims to Hit Seven Figures
Weekly initial jobless claims usually get a short shrift on the data front, but tomorrow will be one of the most important ever.
The weekly claims will give the first real glimpse of the effect the Covid-19 lockdowns and closures on the employment landscape.
The Labor Department will issue the numbers at 8:30 AM ET (12:30 GMT).
Economists are expecting a staggering 1 million people claimed for first-time unemployment benefits last week, according to forecasts compiled by Investing.com. In the Reuters poll the high-end forecast is 4 million.
Claims never came in above 700,000 during the recessions in 2009 and 1982.
"Expectations are all over the map and any number we get on Thursday won't give an accurate picture of what is going on out there with downsizing decisions being discussed in corporate America as we speak," said Mohannad Aama, managing director at Beam Capital Management in New York.
“I worry that not only will it be a record-breaking one-week change but, even worse, just part of an historical surge in unemployment and income collapse,” Allianz (DE:ALVG) Economic Advisor Mohamed El-Erian tweeted.
3. KB Home Earnings on Tap
KB Home (NYSE:KBH) will report earnings after the bell tomorrow and details on the housing market currently will be crucial.
The stock was up 25% after an upgrade from KeyBanc Capital, but is still down 43% year to date.
KeyBanc upgraded shares to overweight from sector weight with a price target of $25.
The upgrade was based on “1) greater comfort in the policy response of key government entities; and 2) a very reasonable valuation, with book valuation (0.6x) offering a historic support basis,” Briefing.com reported.
The company is expected to reported earnings of 44 cents per share on revenue of about $959 million, according to forecasts compiled by Investing.com.