Stocks pulled back modestly from record highs Friday, with Wall Street on edge awaiting word that US lawmakers have agreed to release billions of dollars in fiscal stimulus measures to help promote economic recovery from the pandemic, states Mike Larson of Safe Money Report.

The Dow was down as much as 300 points midday but rallied with spiked eggnog and mistletoe branches in hand to finish down just 124 points, or -0.4%. The S&P 500 fell 0.3%, the Nasdaq 100 fell 0.1%, and the Smallcap 600 fell 0.8%.

Decliners outpaced advancers by a 4-3 margin and there were 957 new highs vs. 34 new lows, a huge differential. Leaders on the new high honor roll were Tesla, Oracle, MercadoLibre, Deere, DuPont, CrowdStrike, our Cadence Design Systems, Palo Alto Networks, Warner Music Group, and UK tractor maker CNH Industrial.

The indexes rose for the week, aided by gains fueled by reports that Democrats and Republicans were close to reaching a potential $900 billion stimulus package to help stave off contraction.

Economists at Jefferies upgraded its 2021 forecast for gross domestic product to 5.25% from 4.5% on expectations that Congress would get the bill passed and signed. "Most of the upside is in consumption. Assuming a four-month extension of enhanced unemployment insurance benefits and a $600 stimulus check, disposable income will surge by 20% quarter-over-quarter annualized in the first quarter of 2021,” Jefferies said in a note.

Among the gainers Friday was Tesla (TSLA), which joined the S&P 500 (SPX) at the close. Intel (INTC) led decliners by losing 2.5% and Nike (NKE) declined 2%. Darden Restaurants (DRI) fell 2%, with fiscal second-quarter sales missing Wall Street's expectations and with earnings guidance for the current period below views. The company, whose chains include Olive Garden and The Capital Grille, faces continued restrictions during the Covid-19 pandemic.

Scorecard Notes:

  • The current bull market is 260 days old and up 65.5% since it started in mid-March. That’s a big gain, but according to Bespoke Investment Group data it is just a fifth of the length of a typical bull market since 1945.
  • The average post-war bull market has posted a 83.1% gain from start to finish. To reach that level, the S&P 500 would have to rally to 4,100, which is 12% higher than the Friday close.
  • There is no sign that the bull market is on its last legs nor that a bear market is imminent despite the severe economic hardship suffered by the rising number of jobless and other pandemic victims. However, there are rarely early signs of bear markets; usually the market just tips over out of the blue and well ahead of a recession, as occurred in February this year and March 2000.
  • Bespoke data shows that all but one bull market that has made it past the 200-day mark has gone on to be positive and relatively low-risk over the ensuing 12 months. The one exception was the 1981 bull that ended in August 1982. But the kicker is that date marked the start of the biggest bull market in history, lasting until March 2000.

Safe Money Report focuses on these kinds of stocks, which include names in the consumer staples, food and beverage, retail, and healthcare sectors. Visit Safe Money Report here…