Before the Bell - Wall Street will shortly begin a new trading session on the first full day of the Biden Administration following the new President's inauguration yesterday afternoon. At this hour, the indications are that the stock market will open to the upside, with particular strength once more in technology. Strong earnings again are helping to underpin the market.  If such a constructive tone is sustained, it would help keep a strong early year market rally intact, which would be no easy feat given the elevated price-earnings ratios now in place.

Meanwhile, there were two major economic stories to start the new day. First, weekly unemployment claims eased slightly by 26,000, to 900,000. Still that was a disheartening number, highlighting the challenges the new Administration faces as to the economy. Claims had fallen steadily through the summer and into fall, but have perked up in recent weeks as infections and deaths from COVID-19 have remained high and increased closures and curfews have made conducting business more difficult. The high level of jobless filings will make the next employment report, out on February 5th, even more closely watched than usual.

In the other news story, housing starts rose 5.8% in December to 1.67 million homes, thereby keeping intact the overall improvement in this key sector. But the major news item yesterday, of course, was the inauguration of Joseph R. Biden as the 46th President of the United States. As the day’s ceremonies continued,  the stock market, up from the start, continued  to push higher on hopes for early passage of additional relief spending along with a changing political backdrop.

Boosting the stock market, as well, was strength in some major technology issues, including shares of Apple (AAPL) and Netflix (NFLX), the latter which posted its biggest gain in four years after indicating it was considering share buybacks. In addition, earnings season continues to heat up, with such big names as UnitedHealth (UNH) and Procter & Gamble (PG) issuing results. The reception here was mixed. The main reason for the equity market's strength yesterday, though, was optimism that a new and more cooperative political tone was being set in Washington.

Looking ahead, and after another solid close in which the Dow Jones Industrial Average would climb 258 points; the S&P 500 would add 53 points; and the NASDAQ would lead the way with a 260-point advance, the market's focus near term likely will be on the Biden Administration and its efforts to expedite the distribution of vaccines to fight COVID-19, moves to get further stimulus approved in Congress, and on hopes for a changing and less divisive tone in the nation's Capitol. There also will be the focus today and during the next few weeks on earnings, with Dow components Intel (INTC) and International Business Machines (IBM) set to report their results after the close today.  – Harvey S. Katz, CFA

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.