U.S. stocks have opened Q2 2021 on the bull. With only a few hours left in the first trading session of April, the DJIA DOW (+174), S&P 500 SPX (+39), and the NASDAQ (+200) are all in the green. Key psychological levels are under fire, with the S&P 500 rally above 4000 and the DJIA taking out 33,100.

Right now, it’s all about government spending. Following last month’s $1.9 trillion COVID relief plan, POTUS Joe Biden is beginning his push for an additional $2 trillion economic recovery package. In an address from Thursday, Biden outlined the broad strokes of his package:

• $2 trillion in spending over 8 years
• $621 billion into transportation infrastructure
• $400 billion to care for elderly and disabled Americans
• $300 billion into improving drinking water infrastructure
• $300 billion into building and retrofitting affordable housing, schools
• $500 billion is allocated to American manufacturing, R&D, and job training

In addition to these items, a second part of the recovery plan is due out later in April. According to Biden:

“These are investments we have to make. We can afford to make them. To put it another way, we can’t afford not to.” 

To pay for the package, Biden proposes that the U.S corporate tax rate be raised from 21% to 28%. At this point, Wall Street is betting that the short-term influx of trillions in stimulus will outweigh the tax hike. For the S&P 500, this sentiment has driven prices above the 4000.00 handle.

S&P 500 Rallies Following Biden Stimulus Proposal

The weekly chart below gives us a look at the June E-mini S&P 500 following Wednesday’s close. As you can see, 4000.00 is going to be a key technical area facing this market for April.

Overview: It’s interesting to note that deferred month E-mini S&P 500 futures quotes are lagging current valuations. This isn’t unusual as backwardation typically applies to futures contracts; basically, an asset has a higher value today than it does tomorrow. However, one has to wonder if Biden tax proposals and a 2022 end to unlimited Fed QE are already being priced into S&P 500 futures. It’s safe to say that everyone in the market understands that a significant pullback in stocks will occur at some point ― the only real question is when.