Stimulus won't instantly save the stock market or America: strategist

Let's put things into perspective.
Wall Street is obsessed with the word stimulus as some sort of magical elixir that could seemingly pull the US economy out of the COVID-19 lull overnight. The common wisdom among investors and strategists - at least for now - is that fresh checks for $ 1,200 to households, an aviation industry bailout, and unemployment charges return (among other things) are all super-cures. Poof, we're going back to a normal economy and a less volatile stock market once the president announced a $ 2 billion incentive on Nov. 4th.
However, it is not that easy, say some level-headed people on the street. As a result, the question that needs to be asked is whether the S&P 500 really deserves to hover at a record high again.
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"I think we're fixated on suggestions," said Tom Essaye, founder of Sevens Report Research, in Yahoo Finance's The First Trade. “The numbers are so big now on suggestion. But we have an employment problem. In a presentation yesterday, I made a table listing weekly unemployment claims. We are still so far above the worst levels of the Great Recession that it is scary. And I think people forget that. "
In case you've forgotten how badly the pandemic hit the US economy, let's refresh the memory.
People looking for work wait in line to speak to over 60 employers at a employment fair in Queens, New York City on May 3, 2012. New unemployment benefit claims in the US fell faster than expected last week but remained painfully high, the Department of Labor reported on May 3, 2012. New unemployment claims for the week ended April 28 were 365,000, compared to a revised one Value of 392,000 the previous week. AFP PHOTO / Stan HONDA (Photo credit should be STAN HONDA / AFP / GettyImages)
Jobless claims rose 53,000 to 898,000 over the past week, resulting in consecutive weeks of improvement. Downsizing continues by the thousands at some of the largest companies in the country.
AT & T's WarnerMedia division is reportedly planning to cut thousands of jobs once the pandemic has affected content development and ad sales. Cineworld has closed all cinemas as COVID-19 cases are on the rise again and 40,000 workers are at risk. American Airlines and United Airlines have laid off thousands of workers as travel remains lukewarm at best. Disney is letting workers go, 28,000 to be precise, with parks almost empty worldwide.
Much of these jobs will never return, a by-product of the pandemic. Other jobs are likely to be very slow to return, a reality of the pandemic that will continue indefinitely.
It's also worth noting that a recent report from Challenger Gray & Christmas indicates that U.S. employers announced 118,804 layoffs in September, up 186% from 41,557 job cuts in September 2019.
Before an investor thinks that a stimulus plan is the silver bullet, they should consider the challenging trends on Main Street.
Unemployment claims rose 53,000 last week after the number of jobless claims improved for weeks.
“If there isn't a widely accepted vaccine or COVID-19 is self-scorching, we will need more work. A check for $ 1,200 does not replace a paycheck for the year, ”says Essaye.
He's right, it won't.
Brian Sozzi is the editor-in-chief and co-host of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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