All three major benchmark U.S. stock indexes were on pace to close at fresh all-time highs Wednesday after Joe Biden was sworn in as the 46th U.S. president.
Earlier in the session, a parade of encouraging corporate earnings reports also helped stoke optimism about the path to recovery.
How are stock benchmarks performing?
- The Dow Jones Industrial Average DJIA, +0.93% rose 238 points, or 0.8%, to reach 31,169, putting it on pace to eclipse its prior 31,097.97 closing high.
- The S&P 500 index SPX, +1.50% climbed 56 points, or 1.5%, to 3,855, after setting a new intraday record, but also above its prior 3,824.68 closing record.
- The Nasdaq Composite COMP, +2.04% also hit a new intraday high, and was up about 282 points at 13,480 at last check, an increase of 2.1%. It needs to beat a prior closing high of 13,201.98.
On Tuesday, stocks posted modest gains to start the holiday-shortened week. The Dow closed 116.26 points, or 0.4%, higher to end at 30,930.52, the S&P 500 index gained 30.66 points, or 0.8%, closing at 3,798.91, while the Nasdaq Composite Index advanced 198.68 points, or 1.5%, to finish at 13,197.18.
What’s driving the market?
Stocks touched record intraday highs Wednesday after Biden was sworn in as president, with a vow to wrestle the ailing economy from the clutches of the pandemic and end a tumultuous four years under the Trump administration. The incoming president also spoke of the need for unity, while pledging to fight for racial justice and to reject extremists and white supremacy.
“We must end this uncivil war that pits red against blue, rural versus urban,” Biden said. “In the work ahead of us, we are going to need each other.”
Last week, Biden laid out plans for a $1.9 trillion COVID-19 relief package, which includes direct payments to Americans and funds set aside for testing and vaccine distribution, to help confront the economic shock from the deadly pandemic.
And on Tuesday, the S&P 500 index snapped a three-session slide after Biden’s Treasury Secretary nominee Janet Yellen endorsed the new administration’s push to “act big,” in terms of providing additional fiscal stimulus to help bridge the economy through the pandemic.
“The market is rallying on hopes for a speedier recovery,” Peter Cardillio, chief market economist at Spartan Capital, told MarketWatch.
But Cardillio also views equity market as “somewhat overbought” and likely due for a pullback, potentially once markets are confronted with the prospects of at least a partial rollback of Trump-era corporate tax cuts and a tighter regulatory environment. “There will come a point in time when the market will reflect on the new administration’s policies,” he said.
Biden likely faces challenges getting his legislative agenda across the finish line with the Senate split 50-50 between Republicans and Democrats, with Vice President-elect Kamala Harris set to provide the tiebreaker.
Biden also will be tasked with healing the country after riots on the Capitol two weeks ago rattled the nation. About 25,000 national troops secured the inauguration event after Trump supporters stormed the seat of government, resulting in five deaths.
“Just the fact that there was a peaceful transition today, that has to reassure people,” said John Carey, director of Equity Income U.S. at Amundi Pioneer, in an interview.
But Carey also views Yellen’s focus on fiscal stimulus, before any tax increases, as encouraging, as well as a the recent string of surprisingly upbeat corporate earnings reports.
“Companies seem to be adapting and figuring out ways to continue doing business,” despite the devastating pandemic, he said. “If companies are able to find ways to make money now, they’ll likely be able to make more money when the COVID situation is no longer such a threat.”
On the policy front, Biden already announced a number of executive orders to reverse some of Trump’s legislation, including rejoining the World Health Organization and the Paris climate accord. He also will end bans on travel from 13 Muslim-majority and African nations.
However, Biden’s main focus will be combating the coronavirus pandemic, as the raging virus in the U.S. registered a grim milestone of 400,000 deaths Tuesday. The U.S. fell short of its goal of vaccinating 20 million people by the end 2020. While the Trump administration’s Operation Warp Speed delivered over 31.1 million doses across the country, only 12.3 million people have received the vaccine.
Read: Coronavirus tally: Global cases of COVID-19 top 96.2 million and U.S. has 401,777 fatalities
Andrew Smith, chief investment strategist of Dallas-based Delos Capital Advisors, expects the cyclical rotation into sectors like energy XLE, +0.41%, financials XLF, -0.32%, and materials XLB, +0.45% to continue, but for any gains for the market as a whole to be a “grind,” until the vaccine rollout becomes more widespread “and we get more clarity on the earnings recovery,” which he thinks could take months.
Read: Why investors continue to ignore ’emerging market’–style U.S. politics
Which stocks are in focus?
- Shares of UnitedHealth Group Inc. UNH, -0.54% slipped 0.4% Wednesday, even after the health care services company reported a fourth-quarter profit that fell less than expected, while revenue rose above forecasts.
- Procter & Gamble Co. PG, -0.95% sales surged in the most recent quarter, fueled in part by demand for high-end household products. Shares were 1.5% lower.
- Shares of Alibaba Group Holding Ltd. BABA, +5.84% shot up 6.4% Wednesday, putting them on track for a fifth-straight gain, after co-founder Jack Ma made his first public appearance in nearly three months
- Tyson Foods Inc. TSN, +3.55% said Wednesday it has agreed to settle all class claims in its previously disclosed broiler chicken antitrust litigation and will pay an aggregate of $221.5 million in settlements. The stock rose 3.7%.
- Shares of renewable energy company Gevo Inc. GEVO, -21.15% tumbled almost 20% after the company said it is selling $350 million of shares in a registered direct offering.
- Netflix Inc. NFLX, +17.50% reported 8.5 million net new subscribers late Tuesday in its fourth quarter, a dramatic uptick from the 2.2 million reported in the previous quarter and well ahead of company and analyst estimates. Shares surged more than 17%.
- Tesla Inc. TSLA, +0.75% shares ticked 1.3% higher amid a price-target increase, to $1,000 a share, by Oppenheimer analysts. That would represent roughly 17% upside.
- Fastenal Co. FAST, -2.98% said demand for equipment used to safeguard against the coronavirus gave it a boost in the fourth quarter.
- Morgan Stanley MS, -0.12% shares dipped 0.2%, after blowing past estimates for its fourth quarter. The bank said it had net income of $3.4 billion, or $1.81 a share, in the quarter, up from $2.2 billion, or $1.30 a share, in the year-earlier period.
What are other markets doing?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 1.090% was flat near 1.09% as investors expect more reflation. Yields and bond prices move in opposite directions.
- The ICE U.S. Dollar Index, DXY, +0.01% a measure of the currency against a basket of six major rivals, was virtually unchanged at 90.49.
- Oil futures closed higher, with the U.S. benchmark CL00, +0.23% gaining 0.5% to settle at $53.24 a barrel on stimulus expectations. Gold futures GC00, +1.64% closed at a near two-week high, with the February contract settling up 1.4%, at $1,866.50 an ounce.
- European equities closed higher. The Stoxx 600 Europe index SXXP, +0.72% gained 0.7%, while London’s FTSE 100 UKX, +0.41% rose 0.4%.
- In Asia, the Shanghai Composite SHCOMP rose 0.5%, while Hong Kong’s Hang Seng Index HSI, +1.08% surged 1.1% and Japan’s Nikkei 225 NIK, -0.38% closed 0.4% lower.
January 20, 2021 at 07:40PM
https://www.marketwatch.com/story/dow-futures-rise-tepidly-on-bidens-inauguration-day-11611146421
U.S. stocks on pace to set closing records as Biden begins presidency with vow of unity - MarketWatch
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