How Stimulus Checks Are Driving a Stock Buying Spree

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The current crisis started this way, too. In February and March last year, the S&P 500 plunged nearly 34 percent as panicked investors sold shares. The market began reversing course in late March after the Federal Reserve cut interest rates to near zero and restarted programs that pumped money into financial markets.

Big Wall Street investors, comforted by the Fed’s moves, barreled right back into the stock market. But alongside the whales were minnows.

Frequently Asked Questions About the New Stimulus Package

The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.

Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more

This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.

There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.

The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.

In March, Google searches for “how to buy stock” soared. Account openings at brokerage firms shot up. Trading in tiny amounts of stock options — a favorite of retail traders — picked up. The brokerage industry’s shift, in recent years, to a commission-free trading model pioneered by Robinhood, the preferred app of young investors, helped the boom. So did social media, which enabled millions of people stuck at home to research stock trading ideas, exchange tips and brag about their wins.

“Threw my stimmy into the stock market and damn, it’s been a beautiful morning,” Mr. Sanchez, the trumpet player, wrote on Twitter on Monday.

The Treasury Department began distributing the latest round of payments last weekend, and roughly 85 percent of American households will ultimately receive them. The latest round follows payments in April and January, when a total of over $400 billion was sent out.

For Victoria Brown, a 25-year-old in Wilmington, Del., with a secure job in government, the $1,400 stimulus check is more of an opportunity than a lifeline. She has already moved the money into her Robinhood account and plans to use some of it to buy the stock of Zomedica, a pet health company she owns 1,000 shares of.

Ms. Brown said her approach to the stimulus was: “How can we take this $1,400 or the $1,600 last year and do something to make more money with it?”

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