US stocks climb amid optimism around Biden’s COVID-19 plan and stimulus push

NYSE traders
  • US stocks gained on Thursday as investors cheered the Biden administration’s plan to better tackle the COVID-19 pandemic.
  • President Joe Biden on Wednesday revealed plans to accelerate testing, vaccine rollouts, and reopenings.
  • Initial jobless claims fell to 900,000 last week, according to the Labor Department. Economists expected claims to total 935,000.
  • Watch major indexes update live here.

US equities rose on Thursday as investors bet on the Biden administration to accelerate the nation’s economic recovery.

President Joe Biden unveiled new plans for how the government will tackle the coronavirus pandemic on Thursday. The president aims to sign 10 executive orders and invoke the Defense Production Act to accelerate testing, vaccine distribution, and reopen schools and businesses.

Efforts to better curb on the virus’s spread are set to join a push for additional fiscal support. The president called for a $1.9 trillion stimulus package earlier in the month that includes $1,400 direct payments, expanded unemployment insurance, and relief for states and municipalities.

Republicans are likely to oppose the measure, having previously balked at passing new aid for governments. Still, expectations for another large-scale spending bill have led analysts to lift growth forecasts and S&P 500 targets.

Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Thursday:

Read more: The chief investment strategist at a $9.6 billion volatility-focused money manager breaks down why the stock market is poised to get more chaotic in 2021 – and shares how investors can take advantage of it

Tech stocks continued to climb after Netflix’s healthy earnings beat boosted indexes the session prior. Equities hit record highs on Wednesday as Biden’s inauguration amplified hopes for fresh fiscal stimulus and a stronger economic recovery. The jump was the largest Inauguration Day return in nearly a century.

In economic data, weekly filings for unemployment benefits totaled an unadjusted 900,000 last week as the labor market’s recovery continued to push up against elevated COVID-19 cases. Economists surveyed by Bloomberg expected claims to reach 935,000. 

Continuing claims, which track Americans receiving unemployment-insurance payments, fell to 5.1 million for the week that ended January 9. That came in below the median economist estimate of 5.3 million claims.

“Fiscal stimulus prospects, along with broader vaccine diffusion, are pointing to a brightening labor market outlook but with the pandemic still raging, claims are poised to remain elevated in the near-term,” Lydia Boussour, lead US economist at Oxford Economics, said.

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United Airlines sank after its fourth-quarter report missed Wall Street expectations for revenue and profit. The company cautioned that, despite vaccines being distributed nationwide, the pandemic will weigh on travel activity throughout 2021.

Bitcoin slid below the $32,000 support level as sell-offs cut further into the cryptocurrency’s bullish momentum. The token hit a 24-hour low of $31,310.75 before paring some losses.

Gold dipped as much as 0.7%, to $1,858.42 per ounce. The dollar weakened against a basked of Group-of-20 currencies and Treasury yields climbed slightly.

Oil prices fell but remained above the $50 support level. West Texas Intermediate crude dropped as much as 1.1%, to $52.75 per barrel. Brent crude, oil’s international standard, declined 1%, to $55.51 per barrel, at intraday lows.

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Bank of America lifts its forecast for US economic growth on hopes for sweeping Biden-backed stimulus

Joe Biden
President-elect Joe Biden speaks about the US economy following a briefing with economic advisors in Wilmington, Delaware, on November 16, 2020.

  • Bank of America lifted its forecasts for US full-year and first-quarter economic growth, citing hopes for new stimulus under the Biden administration and strong consumer spending trends.
  • The bank’s economists lifted their first-quarter GDP forecast to 4% growth from 1% and boosted their 2021 estimate to 5% from 4.6% expansion.
  • Early indicators suggest the $900 billion relief package signed by President Trump last month is already lifting spending activity, the team said in a note to clients.
  • The $1.9 trillion relief plan revealed by Biden on Thursday can further accelerate a return to pre-pandemic economic strength, they added.
  • Visit Business Insider’s homepage for more stories.

Robust consumer spending and the likelihood of additional stimulus led Bank of America to boost its outlook for US economic growth on Friday.

Economists led by Michelle Meyer expect US gross domestic product to grow 5% through 2021, up from the previous estimate of 4.6%. The bank’s first-quarter GDP forecast was also revised higher, to 4% from 1%.

Early indicators suggest the $900 billion relief package passed by President Trump late last month is already lifting economic activity from its nearly frozen state, the economists said. Debit- and credit-card spending is up nearly 10% from the year-ago period as of January 9, compared to being up just 2% before new stimulus was rolled out.

Additional stimulus from a Biden administration adds to the bank’s bullish forecast. The President-elect revealed a $1.9 trillion relief plan on Thursday, pitching $1,400 direct payments, state and local government aid, and a $15 minimum wage as critical to reviving the virus-slammed economy.

Democrats’ new, albeit slim, majority in the Senate signals a version of the plan will reach Biden’s desk. That extra support stands to provide a major backstop for the economy through the new year, Bank of America said.

Read more: ‘I don’t believe that we’ve really left the recession yet’: Bond king Jeff Gundlach lays out the 2 risks that investors should watch nearly a year into the pandemic – and shares the 4 components of a balanced, winning portfolio

“There are risks in both directions, but we see them skewed to the upside,” the team said in a note to clients. “There is now a ‘fiscal put’ akin to the ‘Fed put.'”

Fresh fiscal relief also takes some pressure off of the Federal Reserve in the near-term, the economists added. Should new stimulus fuel stronger growth and inflation, the Fed could rein in its easy monetary policy stance sooner than initially expected. 

The Biden-backed stimulus also provides the fiscal support Fed policymakers clamored for throughout 2020. If the economy weakens further, the government can coordinate a fiscal- and monetary-policy response akin to that seen at the start of the pandemic, the team said.

Still, elevated COVID-19 cases and strict economic restrictions will delay a full recovery, they added. Bank of America expects GDP will return to pre-pandemic levels in the third quarter.

While front-loaded stimulus boosted the firm’s first-quarter forecast, the early passage of a relief deal cut its second-quarter growth estimate to 5% from 7%.

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Read the original article on Business Insider

Monetary stimulus will remain in place well into economic recovery, Fed Chair Powell says

jerome powell fed mask
  • Federal Reserve Chairman Jerome Powell reiterated Thursday that the central bank is far from tapering its asset purchases or raising interest rates.
  • “Now is not the time to be talking about an exit” from easy monetary policy, the central bank chief said in a virtual discussion.
  • The comments come after various Fed officials suggested that inflation could pick up faster than expected and, in turn, prompt an early rate hike.
  • Powell rebuffed fears of an unexpected policy shift, noting the central bank will notify the public “well in advance” if it is considering changes to its policy stance.
  • Visit Business Insider’s homepage for more stories.

Those worrying the Federal Reserve will prematurely rein in monetary stimulus have little to fear, Fed Chairman Jerome Powell said Thursday.

As COVID-19 vaccines roll out across the country, investors and economists have looked to Fed officials for any hints as to when its extremely accommodative policy stance could reach its conclusion. The central bank is currently buying $120 billion worth of Treasurys and mortgage-backed securities each month to ease market functioning, and its benchmark interest rate remains near zero to encourage borrowing.

An unexpected reversal from such easy monetary conditions risks spooking financial markets and cutting into the country’s bounce-back. Powell emphasized on Thursday that the central bank remains far from adjusting monetary conditions and that markets need not worry about a surprise policy shift.

“Now is not the time to be talking about an exit,” the central bank chief said in a virtual discussion hosted by Princeton University. “I think that is another lesson of the global financial crisis, is be careful not to exit too early. And by the way, try not to talk about exit all the time if you’re not sending that signal.”

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The messaging mirrors past statements from Fed policymakers. Early in the pandemic, Powell told reporters the central bank wasn’t “thinking about thinking about” lifting interest rates. The Federal Open Market Committee noted last month that changes to its policy stance won’t arrive until “substantial forward progress” toward its inflation and employment objectives is made.

Still, recent commentary from some officials has stoked some fears that the Fed could cut down on the pace of its asset purchases sooner than expected. Kansas City Fed President Esther George said Tuesday that inflation could reach the Fed’s target “more quickly than some might expect” if the economy’s hardest hit sectors quickly recover.

A swifter-than-expected rebound could prompt an interest-rate hike as early as mid-2022 Atlanta Fed President Raphael Bostic said Monday. The projection stands in contrast with the FOMC’s general expectation for rates to remain near zero through 2023.

Powell reassured that, when the Fed starts considering a more hawkish stance, messaging will come well before action is taken. Treasury yields responded in kind, with the 10-year yield climbing nearly 4 basis points to 1.127 and the 30-year yield rising about 6 basis points to 1.874.

“We’ll communicate very clearly to the public and we’ll do so, by the way, well in advance of active consideration of beginning a gradual taper of asset purchases,” the Fed chair said.

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US stocks close mixed as stimulus optimism clashes with new virus strain

nyse open floor traders mask.JPG
  • US stocks closed mixed on Tuesday after Congress passed a multitrillion-dollar spending bill that includes $900 billion in new stimulus.
  • The package, which also funds the government through September 30, includes $600 direct payments, $300 in additional federal unemployment benefits, and aid for small businesses. 
  • The fresh fiscal support locked horns with concerns around a new strain of COVID-19 in the UK. The variant’s emergence prompted several European nations to enact travel restrictions on UK visitors.
  • Oil futures fell as investors viewed the new virus strain as a risk to near-term energy demand. West Texas Intermediate crude fell as much as 2.4%, to $46.60 per barrel.
  • Watch major indexes update live here.

US equities closed mixed on Tuesday as investors weighed Monday’s stimulus vote against the emergence of a new coronavirus strain in the UK.

Congress approved the measure Monday night after months of negotiations over additional fiscal support. The bill, which includes $900 billion in new stimulus, funds the government through September 30. The package also includes $600 direct payments, $300 in additional federal unemployment benefits, and funds for the Paycheck Protection Program.

Here’s where US indexes stood at the 4 p.m. ET market close on Tuesday:

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The White House has indicated President Donald Trump will sign the bill. Economists have largely backed additional fiscal support, though the slowed pace of economic recovery and rising COVID-19 cases still present sizeable risks.

“The $900 billion fiscal aid package is months late and will likely fall short of what is needed to prevent a rough winter, but it’s better than nothing,” Gregory Daco, chief US economist at Oxford Economics, said, adding the measure will “partially buffer the current economic slowdown” while vaccines are distributed.

Enthusiasm toward the new fiscal support was somewhat offset by reports of a new COVID-19 variant in the UK. Several European countries implemented travel restrictions on UK visitors to slow its spread.

Fears were somewhat allayed later in the day after public health experts said Pfizer and Moderna’s COVID-19 vaccines are likely effective against the new strain. Still, the new restrictions and virus fears threaten to tamper down on already weakened economic activity.

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Economic indicators also flashed some warning signs. US consumer confidence unexpectedly fell to a four-month low this month as surging COVID-19 cases and stricter lockdown measures offset a slight improvement in Americans’ long-term outlooks, Conference Board said Tuesday. The organization’s sentiment gauge fell to 88.6 from 92.9, while economists expected a jump to 97.

The tech and real estate sectors outperformed, while communications-service and energy stocks lagged.

The Nasdaq composite index was lifted by Apple, which extended a late Monday climb following a Reuters report that the iPhone maker aims to produce electric cars by 2024. The news also boosted lidar-sensor producers, as Apple reportedly plans to partner with such firms for its vehicle systems.

Peloton soared after the company inked a deal to buy exercise-equipment company Precor for $420 million. Peloton plans to use Precor’s facilities to boost its manufacturing capacity and cut down on its order backlog.

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Bitcoin rose back above $23,000 after plunging the most in nearly a month on Monday. The cryptocurrency faced pressure after the US Treasury proposed rules that would require exchanges to collect information from users who transfer more than $10,000 to a crypto wallet.

Spot gold erased early gains and fell as much as 1%, to $1,858.97 per ounce, at intraday lows. The US dollar strengthened against all of its Group-of-10 peers and Treasury yields dipped.

Oil prices fell amid fears that the new COVID-19 strain will further cut into demand. West Texas Intermediate crude dropped as much as 2.4%, to $46.60 per barrel. Brent crude, oil’s international benchmark, declined 2.7%, to $49.56 per barrel, at intraday lows.

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US stocks trade mixed as investors weigh $900 billion stimulus package against renewed virus fears

NYSE traders
  • US stocks traded mixed on Tuesday after Congress passed a multitrillion-dollar spending bill that includes $900 billion in new stimulus.
  • The package, which also funds the government through September 30, includes $600 direct payments, $300 in additional federal unemployment benefits, and aid for small businesses. 
  • Investors are weighing the bill’s passage against concerns around a new strain of the coronavirus in the UK.
  • Oil futures fell as investors viewed the new virus variant as a risk to near-term energy demand. West Texas Intermediate crude fell as much as 2.9%, to $46.60 per barrel.
  • Watch major indexes update live here.

US equities edged higher on Tuesday after Congress passed a $2.3 trillion bill that included government funding and a new tranche of stimulus measures.

Lawmakers approved the measure Monday night after months of negotiations over additional fiscal support. The bill, which includes $900 billion in new stimulus, funds the government through September 30. The package also includes $600 direct payments, $300 in additional federal unemployment benefits, and funds for the Paycheck Protection Program.

Here’s where US indexes stood shortly after the 9:30 a.m. ET market open on Tuesday:

Read more: Brooke de Boutray has beaten 99% of her peers over the last 5 years and runs a fund that is up 148% in 2020. She shared with us 4 stocks she’s most bullish on heading into 2021.

The White House has indicated President Donald Trump will sign the bill. Economists have largely backed additional fiscal support, though the slowed pace of economic recovery and rising COVID-19 cases still present sizeable risks.

“The $900 billion fiscal aid package is months late and will likely fall short of what is needed to prevent a rough winter, but it’s better than nothing,” Gregory Daco, chief US economist at Oxford Economics, said, adding the measure will “partially buffer the current economic slowdown” while vaccines are distributed.

The mixed trading follows a mild decline across indexes on Monday. Stocks fell to start the week amid concerns around a new strain of the coronavirus emerging in the UK. Several European countries implemented travel restrictions on UK visitors.

Fears were somewhat allayed later in the day after public health experts said Pfizer and Moderna’s COVID-19 vaccines are likely effective against the new strain.

Read more: BANK OF AMERICA: Buy these 16 medtech stocks with strong fundamentals that are set to soar post-pandemic

The Nasdaq composite index was lifted by Apple, which extended a late Monday climb following a Reuters report that the iPhone maker aims to produce electric cars by 2024. The news also boosted lidar-sensor producers, as Apple reportedly plans to partner with such firms for its vehicle systems.

Peloton soared after the company inked a deal to buy exercise-equipment company Precor for $420 million. Peloton plans to use Precor’s facilities to boost its manufacturing capacity and cut down on its order backlog.

Bitcoin rose back above $23,000 after plunging the most in nearly a month on Monday. The cryptocurrency faced pressure after the US Treasury proposed rules that would require exchanges to collect information from users who transfer more than $10,000 to a crypto wallet.

Spot gold gained as much as 0.4%, to $1,884.33 per ounce, at intraday highs. The US dollar wavered against a basket of currency peers and Treasury yields dipped.

Oil prices fell amid fears that the new COVID-19 strain will further cut into demand. West Texas Intermediate crude dropped as much as 2.9%, to $46.60 per barrel. Brent crude, oil’s international benchmark, declined 2.7%, to $49.56 per barrel, at intraday lows.

Now read more markets coverage from Markets Insider and Business Insider:

Brian Barish’s mutual fund crushed the market for 8 straight years and is in the top 2% after reinventing value investing for the digital age. Here’s how they pulled it off.

SoftBank aims to raise up to $525 million for its own blank-check company

Treasury Secretary Mnuchin expects direct stimulus checks to be released next week, says he ‘couldn’t be more pleased’ about deal

Read the original article on Business Insider