Stocks rose Wednesday, extending Tuesday’s advances as
investors looked ahead to the first actions of the incoming Biden
administration.
Each of the three major indexes reached record intraday and
closing highs, and the Nasdaq outperformed with a gain of nearly 2%. Shares of
Netflix (NFLX) spiked more than 16% after the company added more users than
expected in the fourth quarter and surpassed 200 million paid subscribers for
the first time ever.
On Wednesday, all eyes turned to the inauguration of
President-elect Joe Biden, which took place at the West Front of the Capitol
just noon before in a scaled-down, socially distant event.
In his first hours in office, Biden is set to immediately
begin signing executive actions to address the pandemic, virus-stricken
economy, climate change and racial equity, according to a memo over the weekend
from incoming White House Chief of Staff Ron Klain.
Moreover, Biden is set to quickly begin pushing to get more
virus relief aid into the economy, after having unveiled a $1.9 trillion
proposal last week that would include increased stimulus checks, extended
unemployment benefits and aid to state and local governments, among other
measures.
Janet Yellen, Biden’s nominee for Treasury Secretary,
advocated for significant additional coronavirus relief spending during her
confirmation hearing before the Senate Finance Committee on Tuesday, and added
that she would work with the Biden administration on its other priorities as
well, including increasing infrastructure investment, enacting environmental
protection legislation and eventual tax reforms.
Still, her discussions of the $1.9 trillion stimulus package
received some push-back from Republican lawmakers, many of whom balked at
passing another major package that they suggested might not be targeted enough
to provide support only to those who need it most.
The virus’s human and economic toll became still-more
evident this week, as the U.S. passed the grim milestone of 400,000 total
coronavirus-related deaths for the first time as of Tuesday. Deaths and
hospitalizations have spiked in the last week, as the post-holiday spike
emerged in full force.
But even given the virus’s current spread, traders have
fixed their gaze firmly toward the future, awaiting the acceleration of the
coronavirus vaccine roll-out and the economic reopening expected to take place
in its wake.
“Markets are forward-looking, so it’s not exactly about the
immediate coronavirus increase in case, hospitalizations. It’s more about what
the economy is going to look like later this year,” Ryan Payne, Payne Capital
Management president, told Yahoo Finance on Tuesday. “And I think when you
start looking at [the fact that] you have a new president, you have a
Democratic majority in both the House and the Senate, the one thing I think we
can bet on here is we’re going to see a lot of spending everything from this
$1.9 trillion bill they’re trying to pass, on top of the $3 trillion we already
passed last year plus the $900 billion we already passed in December, and we
could see some infrastructure deal down the line which will be another
multi-billion dollar bill.”
“We’re just looking at so much liquidity out there, and I
think what the market is telling you right now — you’re starting to see
interest rates go up, you’re starting to see commodity prices go up — that
inflation is a real thing and printing all this cash is certainly going to
cause inflation as we look out later in the year,” he added.
The three major indices held sharply higher in intraday
trading on Wednesday, with both the Nasdaq and S&P 500 higher by well over
1%. The communication services, consumer discretionary and real estate sectors
led gains in the S&P 500, and only the consumer staples and financials
sectors were lower on the day.
The Dow added more than 200 points, or 0.8%, with about two
hours left in the regular trading day. The S&P 500 gained 1.4%, and the
Nasdaq jumped 1.9%.
Homebuilder confidence unexpectedly fell in January,
reaching the lowest level in four months as rising lumber prices and COVID-19
cases weighed on sentiment, according to the National Association of
Homebuilders (NAHB).
The NAHB’s monthly housing market index declined to 83 in
January from 86 in December, missing consensus estimates for an unchanged
reading, according to Bloomberg data. Still, the index remains up sharply from
this time last year, when the index was at 75.
“Despite robust housing demand and low mortgage rates,
buyers are facing a dearth of new homes on the market, which is exacerbating
affordability problems,” NAHB Chairman Chuck Fowke said in a statement.
“Builders are grappling with supply-side constraints related to lumber and
other material costs, a lack of affordable lots and labor shortages that delay
delivery times and put upward pressure on home prices. They are also concerned
about a changing regulatory environment.”
Morgan Stanley (MS) became the latest big bank to report a
surge in trading revenue at the end of 2020, helping catapult the full-year
results for Wall Street’s biggest equity trading shop to record levels. Shares
rose about 2% in pre-market trading.
Equity trading revenue grew 30% over last year to $2.5
billion, while fixed-income trading increased 31% to nearly $1.7 billion.
Investment banking was also a strong area, with revenues in this business
growing 46% to $2.3 billion, driven largely from a spike in revenue from
underwriting IPOs and advising mergers and acquisitions.
Overall, fourth-quarter net revenues grew 25% to an
estimates-topping $13.6 billion, while net income grew by more than 50%. For
the full year, net revenues were a record $48.2 billion, rising more than 16%
from the $41.4 billion the bank reported year ago.
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