Dow Jones Rallies After Stimulus Bill Signed; Apple Stock Surges Despite Car Concerns

The Dow Jones Industrial Average (DJINDICES:^DJI) surged on Monday following news over the weekend that President Donald Trump had signed a stimulus and government spending bill that had been in limbo since it passed Congress last week. The Dow was up about 0.8% at 11:50 a.m. EST.

Mega-retailer Walmart (NYSE:WMT) will certainly benefit from the stimulus package as its lower-income and unemployed customers receive a financial boost, although the stock trailed the market on Monday. Beating the market handily was Apple (NASDAQ:AAPL) stock despite an analyst warning related to the company’s reported self-driving car project.

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Trump signs stimulus bill

After signaling his disapproval of a pandemic relief and government spending bill, President Trump ultimately signed the bill on Sunday. The bill includes around $900 billion aimed at supporting Americans as the pandemic rages ahead of the expected widespread availability of vaccines early next year.

The bill includes $600 stimulus checks for adults and children, subject to income limits. This is smaller than the $1,200 stimulus checks sent to adults as part of the CARES Act in March. Federal supplemental unemployment benefits will also be extended through March 14 at $300 per week, providing extra help to those who’ve lost their job due to the pandemic.

The new stimulus bill is good news for retailers like Walmart that benefited from the first round of stimulus earlier this year. Walmart has posted impressive sales growth throughout the pandemic, particularly e-commerce growth. But overall comparable sales slowed in the third quarter as stimulus benefits dried up.

The company posted 6.4% comparable sales growth in the U.S. in the third quarter, down from 9.3% growth in the second quarter. Almost all of that growth was driven by e-commerce, and the total number of transactions tumbled by more than 14%. Walmart caters to lower-income customers hit hardest by the pandemic, so additional stimulus should help drive sales of essentials over the next few months.

Shares of Walmart didn’t get much of a boost on Monday, up about 0.3% by late morning. The stock has run up 21% this year as the company’s investments in e-commerce and online grocery paid off amid the pandemic.

Analyst questions Apple car plans

Rumors that tech giant Apple was working on a self-driving car reemerged last week. That news sent the stock higher, but TFI analyst Ming-Chi Kuo thinks the market may be getting ahead of itself.

Kuo expects Apple to be at a major disadvantage to companies that have already been accumulating data to train their self-driving systems. Kuo doesn’t see Apple launching a car before 2025, with a launch in 2028 or later possible, according to the analyst. By then, Apple will be woefully behind in terms of the data needed for the AI systems involved in a self-driving car.

Kuo is concerned that Apple won’t be able to overcome this data gap, thus ceding the market to competitors. Of course, Apple could conceivably buy data or acquire companies that have been collecting data. Apple certainly has the resources to make a huge acquisition if necessary.

There are still many questions outstanding about Apple’s reported car plans. The company is unlikely to manufacture the car itself, so it would presumably need to forge a partnership with a manufacturer to make an Apple car a reality. And whether the ecosystem Apple has built around its devices provides any kind of edge in the automobile market remains to be seen.

Shares of Apple were up about 2.3% by late Monday morning as the stock market broadly rallied. The stock has gained about 84% this year. This pandemic rally has pushed Apple’s price-to-earnings ratio above 40, a historically high level for the company and difficult to justify given the tech giant’s size and growth prospects. 2021 may not be so kind to Apple investors, given the sky-high stock price.