- The lack of progress in reaching an agreement on fiscal stimulus in the US is the biggest catalyst for volatility for stocks right now, National Securities’ chief market strategist, Art Hogan, told CNBC on Wednesday.
- “The No. 1 catalyst in this market causing the most volatility is the path of fiscal policy and whether we can get that out of the Beltway,” Hogan said, adding that markets were less concerned about the election result.
- President Donald Trump this week signaled an end to stimulus talks but later called for a standalone bill to help the airline industry.
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The gridlock over a new economic stimulus package in Washington is the biggest catalyst for market volatility, rather than the upcoming election, National Securities’ chief market strategist, Art Hogan, told CNBC’s “Trading Nation” on Wednesday.
“The No. 1 catalyst in this market causing the most volatility is the path of fiscal policy and whether we can get that out of the Beltway,” Hogan said.
“We need more fiscal policy stimulus,” he said. “We’ve heard that from the Fed. We’ve certainly heard it from economists.”
President Donald Trump said on Tuesday that he would end talks between Democrats and Republicans until after the election. He later urged lawmakers to approve direct $1,200 payments to taxpayers, aid for small businesses, and direct assistance to airlines to prevent layoffs.
Democrats and Republicans have been in a stalemate since July over the size of the next fiscal relief plan, though House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin signaled in recent days that they’d made some progress.
Video: Poll: Majority of voters want more federal stimulus (CNBC)
Though a full-fledged fiscal plan is unlikely before the election, market watchers have welcomed the increasing likelihood of a standalone bill for airlines, which have been hit hard by the pandemic.
Hogan said that fiscal stimulus was the theme dominating Wall Street and that participants were less concerned about the election result.
Read more: A $2.5 billion investment chief highlights the stock-market sectors poised to benefit the most if stimulus is passed after the election — and says Trump ending negotiations doesn’t threaten the economic recovery
But he said a situation where Democrats take control of the White House and the Senate and retain control of the House would be the preferred result for stock-market investors.
“I think that the market participants would certainly feel more comfortable with a Biden presidency and even a blue wave,” he said, adding that “a Democrat in the White House and a Democrat-controlled Congress probably brings more, not less, fiscal stimulus.”
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Hogan expects a range of 3,200 to 3,400 for the S&P 500 for the rest of the year but said a record high would not be out of the question. The index closed at 3,419.45 on Wednesday.
“With the certainty of the election behind us,” Hogan said, “we could break out from the top end of that and get to 3,600 by year-end.”