Sometimes a picture is worth a thousand words.

It seems that hope for a stimulus bill is what keeps us plodding along.

The COVID-19 pandemic took a wrecking ball to the economy. GDP shrank by about 33% in the second quarter, and third-quarter numbers are expected to look rough as well.

We should be in Great Depression 2.0, complete with breadlines.

The fact that we aren’t is largely due to two factors:

  • The Federal Reserve’s herculean efforts to keep the financial system functioning.
  • Massive, unprecedented fiscal stimulus approved by Congress earlier this year.

The CARES Act, among other things, made one-time payments of $1,200 to most Americans. It also added $600 per week to unemployment benefits and created a massive new loan program for struggling businesses. Some Americans were making more money sitting at home than they ever did in their pre-coronavirus jobs.

All of this largess from the federal government helped keep the bottom from falling out. It encouraged Americans to keep spending … even if that meant on Amazon’s virtual marketplace instead of a trip to the mall.

While the first stimulus efforts are a done deal, the economy is far from healed. Roughly 898,000 Americans filed for first-time unemployment claims last week. The 53,000 jump from the previous week means we’re actually heading in the wrong direction.

And 10 million Americans are still out of work.

With the election just weeks away, both parties are scrambling to put a plan together:

  • President Donald Trump and the Republican-controlled Senate are looking for a quick win. It might include a new round of Paycheck Protection Plan (PPP) funding for small businesses.
  • Democrats are looking for a larger, more comprehensive program that includes aid to states for school reopenings and other expenses.

Stimulus Hopes and the Stock Market

coronavirus crisis stmulus hopesThe S&P 500 has been trading sideways since the end of August. We can’t blame all of this on the lack of a stimulus bill.

Jitters over the upcoming presidential election, an uptick in virus cases and normal seasonal weakness are all playing a role.

But stimulus uncertainty is clearly affecting investor sentiment, which begs the question: Who benefits the most from a new stimulus bill?

It’s been a fantastic year for stocks that are considered to be “pandemic-proof,” or at least close to it. This would apply to most of the large-cap tech names like Apple Inc. (Nasdaq: AAPL) and Inc. (Nasdaq: AMZN).

Amazon made out like a bandit during the pandemic. With their brick-and-mortar competitors sidelined, Amazon had a once in a generation opportunity to grab market share.

But while Amazon might be COVID-proof, it’s not recession-proof. We can’t get precise numbers, but it’s safe to assume that a decent chunk of the $600-per-week unemployment benefits ended up in Amazon’s shopping cart. All retailers benefit from free-flowing government stimulus.

Bottom line: If you’re looking for a play on the eventual passage of a stimulus bill, look at retail stocks.

Your best bet lies with retailers that have held up throughout the pandemic. Walmart Inc. (NYSE: WMT), Target Corp. (NYSE: TGT) and Best Buy Co. Inc. (NYSE: BBY) have all done well, and that should continue when the government spigot starts flowing again.

Money & Markets contributor Charles Sizemore specializes in income and retirement topics. Charles is a regular on The Bull & The Bear podcast. He is also a frequent guest on CNBC, Bloomberg and Fox Business.

Follow Charles on Twitter @CharlesSizemore.