Tariff checks and lower taxes are priced in the markets

"Reality check: The market runs on expectations, but it also runs on earnings, and if consumers can spend more after a windfall from policy stimulus, then earnings should grow. "I've got this bet on the consumer" with the One Big Beautiful Bill, "which is going to allow for higher deductions and therefore bigger tax refunds for much of the middle-income people who do a lot of the consuming," says Jim Caron, chief investment officer at Morgan Stanley."

""I would be very surprised if it is in base cases yet, because we simply just don't know" what will happen with these checks, Michael Metcalfe, senior economist at State Street, says. If those stimulus checks are doled out, and they lead to more inflation, "this is not my forecast, but never say never, you cannot rule out rate hikes," Gordon of Schwab says."

President Trump suggested $2,000 stimulus checks funded by tariff revenue, though details remain uncertain. Higher-income households can expect lower taxes in 2026 under the One Big Beautiful Bill while middle- and lower-income households are likely to receive more modest relief. The law permits businesses to expense research and development costs, potentially increasing corporate R&D spending. Markets appear to have largely priced in expectations from the law, limiting upside, but stronger consumer spending from tax refunds or stimulus could support earnings. If stimulus boosts inflation, additional interest-rate hikes cannot be ruled out, and uncertainty persists over whether checks will be enacted.

Read at Axios