Stock Market Today: Disney Adds to the Market's Magical Run

The wind remained beneath stocks' wings on Wednesday, as Washington's stimulus standoff improved and corporate earnings encouraged investors.

Congressional Democrats and White House representatives said Tuesday evening that the two sides might be able to agree on another rescue package by week's end, with passage possibly coming next week. (Note: As readers of our free A Step Ahead e-newsletter learned this morning, our political forecasters at The Kiplinger Letter are less optimistic about a stimulus bill so soon.)

The corporate earnings calendar delivered a few single-stock surges today, too.

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Disney (DIS, +8.8%), for instance, reported a larger-than-expected revenue decline for its most recent quarter. However, investors instead focused on the fact that its Disney+ streaming service now boasts 60.5 million subscribers; the entertainment conglomerate had targeted 60 million to 90 million subscribers by 2024.

"Overall, with new CEO Mr. Bob Chapek now indicating an 'innovative and bold' further pivot to streaming, we expect Disney shares to be even more aggressively positioned as a streaming growth story (where investors have limited investment vehicles), and eventual COVID recovery play," write Credit Suisse analysts, who upgraded the stock to Outperform.

Square (SQ, +7.1%), which reported a day early in response to someone gaining "early external access" to its results, announced a 64% jump in revenues thanks largely to Bitcoin-related activity.

That said, Piper Sandler analysts kept the stock at Neutral, noting that "despite a good start to July gross payment volume, management sounded some cautious notes around 3Q20. These included Square Capital, risks of stimulus programs not being renewed, and higher expenses."

The Dow Jones Industrial Average finished solidly in the black, closing up 1.4% to 27,201. The S&P 500 climbed 0.6% to 3,327. The Nasdaq Composite, up 0.5% to 10,998, set yet another all-time high. And small-caps roared yet again, with the Russell 2000 closing with a 1.9% gain to 1,546.

Stock: Too Far, Or Not Far Enough?

There's a growing chorus of market minds worried the current rally is a little excessive, however.

Mad Money host Jim Cramer called the broader market "stupidly bullish" yesterday evening. He also railed against counterintuitive stock surges such as BP's (BP) 7% jump Tuesday after cutting its dividend. Cramer said the rally was vying for the "dumbest action of the year."

Others, such as Canaccord Genuity equity strategist Tony Dwyer, have been a bit more subtle. Dwyer says the S&P 500 hitting its 3,300+ target suggests "limited upside."

However, he also admits that "the combination of excess liquidity, monetary and fiscal policy, and global economic turn off the bottom reinforce adding risk exposure on any meaningful pullbacks despite the proximity of our target," adding that investors might be underappreciating a global recovery in 2021 that could benefit more economically sensitive industries.

Of course, if you're a buy-and-holder, you're just enjoying the ride. A short-term slip is nothing to fear – though it could be a great place to buy if you're holding on to any more cash.

To build your wish list, explore some of these blue-chip hedge-fund favorites, or consider these recession-proof stocks that are built to withstand a difficult economic recovery. And if you're looking to establish your next great retirement position, a dip would allow you to enjoy even better yields on high-yielding dividend stalwarts. Read on as we explore our updated list of 20 retirement plays that have the ability to deliver big dividends for decades down the road.