US Stock Market Overview – Stocks Rise Led by Discretionary Retailers

US stocks moved higher on Monday, driven by additional liquidity provided by the Bank of Japan. This comes ahead of ECB and Fed meetings that are scheduled for later in the week. The S&P 500 index and the Nasdaq hit fresh 7-week highs. Oil prices continue to move lower, which failed to drag on energy shares. All sectors in the S&P 500 index were higher, led by a gain in consumer discretionary stocks, consumer staples were the worst performers in a down tape. Retail stocks were the best performers in the discretionary space led by Kohls.

Health Care Stocks Get a Boost

Health care stocks got a boost on Monday following a decision by the Supreme Court on Monday which ruled the federal government is obligated to pay billions of dollars to health insurers that sold consumer policies on exchanges created by the Affordable Care Act. The court’s ruling clears insurers to seek roughly $12 billion under an ACA program in place during early implementation of the 2010 health law that sought to mitigate financial risks for insurers that sold policies on ACA insurance exchanges.

States Want More Testing Before Reopening

The Trump administration announced that it would send all 50 states enough tests to screen at least 2% of residents for the new coronavirus, to rapidly expand supplies in the coming weeks as the nation’s leaders look to reopen parts of the economy. President Trump plans to give a news conference in which he is expected to discuss testing. The official said that testing 2% of each state’s population was the minimum needed to maintain public health.

The BOJ Changes is Cap on Bond Purchases

The Bank of Japan eliminated its asset purchase limits in favor or buying whatever is needed.  This seems an admission than a policy shift as limits on bond-buying don’t make any sense under a policy of strict yield curve control.  The central bank revised down their inflation forecast for 2020 to a range of -0.7% to -0.3% from January’s range of +1.0% to +1.1%, while its GDP forecast was revised down to a range of -5.0% to -3.0% from the +0.8% to +1.1% outlined in January.