Before the Bell: Optimism was on display on Wall Street yesterday as the nation prepared for the inauguration of Joseph R. Biden, Jr., at 12:00 PM (EST) today, as the 46th President of the United States. Specifically, the stock market was on strong footing to begin the session as the Dow Jones Industrial Average jumped some 275 points in the first few minutes of trading. Hopes for a more collegial atmosphere in a badly divided country and expectations that this changing mood would expedite stimulus help against the pandemic all helped the mood on the Street.
Regarding Wall Street in the day ahead, the early read on Inauguration Day is for the bulls to see early gains in the equity market.
As to yesterday on the Street, stocks rose on the aforementioned stimulus hopes following a losing week during the past five days. Soon to be President Biden is going to push for another $1.9 million in fiscal stimulus, and with control of both houses of Congress, there is a decent chance he will get his wish. Also, there is optimism that the new Administration will have more success than its predecessor in getting the vaccine distribution program up and running. Stocks also climbed as Treasury Secretary nominee Janet Yellen endorsed higher coronavirus relief spending to aid the stricken economy.
Meanwhile, stocks continued higher after that quick start, but the morning-best levels were not surpassed. Indeed, the Dow stayed in a tight band, with gains in a 100-150 points for the most part. The S&P 500, though, held near its best levels of the day as did the tech-heavy NASDAQ. In all, the Dow would add 116 points, with that index coming up close to 31,000. The S&P 500 would rise 30 points and the NASDAQ, boosted by strength in the tech stocks, added 198 points.
As for Treasury Secretary nominee Yellen (a vote on her confirmation is likely tomorrow), she indicated at her confirmation hearing before the Senate that the new President would be in favor of some tax increases on wealthy Americans and corporations. However, she opined that these taxes would not be coming yet, as the economy is still too weak. Investors liked this position and her words helped to sustain the day's advance. She was supportive of the dollar, as well, and also of a tough approach to China.
Meantime, the stock markets now will await Joe Biden's address to the nation at his inauguration this afternoon. In other news, Wall Street received earnings results yesterday from both Goldman Sachs (GS) and Bank of Bank of America (BAC). Results were strong at the former and mixed at the latter. But neither stock showed any strength during the day. Today will feature another round of corporate results as Wall Street attempts to keep the bullish ball rolling into another Administration. – Harvey S. Katz, CFA