Stocks Lifted by President Joe Biden’s Stimulus Plan Hopes

Stocks advanced on Thursday, ahead of speeches by President-elect Joe Biden and Federal Reserve Chair Jerome Powell. Biden is set to unveil his economic goals and plans for further U.S. stimulus, and Powell is anticipated to reinforce that the Fed isn’t taking its foot off the gas anytime soon. All the market has cared about for months has been the twin tailwinds of massive fiscal and monetary policy support, and Thursday’s remarks are likely to keep spirits bullish. The Dow Jones Industrial Average rose 112 points, or 0.4% on Thursday afternoon, while the S&P 500 was up 0.2% and the Nasdaq Composite added 0.4%.

The small-cap Russell 2000 jumped 2.2%. Cyclical and economically sensitive sectors of the market were outperforming growth and defensive areas. The gains came after CNN reported that President-elect Joe Biden, who is due to speak in Wilmington, Del., will outline a $2 trillion proposal that will include more direct payments to American families and significant state and local funding. The yield on the 10-year U.S. Treasury rose on Thursday, to about 1.10%. The need for more stimulus was apparent following Thursday’s jobless claims release. Some 965,000 Americans filed for first-time unemployment insurance, far more than forecasts for 812,000. The gains came after CNN reported that President-elect Joe Biden, who is due to speak in Wilmington, Del., will outline a $2 trillion proposal that will include more direct payments to American families and significant state and local funding. The yield on the 10-year U.S. Treasury rose on Thursday, to about 1.10%. The need for more stimulus was apparent following Thursday’s jobless claims release. Some 965,000 Americans filed for first-time unemployment insurance, far more than forecasts for 812,000.

 

“In the markets, the bigger the proposal’s price tag, the better for equities and the U.S. dollar. There has been a paradigm shift lately in dollar dynamics, where promises of astronomical spending now boost the reserve currency as the rosier outlook for growth overshadows deficit concerns. If all the spending supercharges the economy, the Fed could reign in its generous QE [quantitative easing] program sooner,” said Marios Hadjikyriacos, investment analyst at XM. Fed Chair Powell is participating in an online conversation with Markus Brunnermeier, director of Princeton’s Bendheim Center for Finance. Topics will include the central bank’s new policy framework and its crisis response. The Nikkei 225 and Hang Seng each rose 0.9% on Thursday, and the Stoxx Europe 600 added 0.7%. Shares of Chinese technology firms Alibaba (BABA), Baidu (BIDU), and Tencent (TCEHY) gained 4.1%, 7.2%, and 4.2%, respectively. The U.S. Treasury reportedly blocked an attempt by the Pentagon to force the divestiture of Chinese internet giants by American investors. Spaceflight company Virgin Galactic (ticker: SPCE) jumped 13.9% after ARK Investment Management filed with the Securities and Exchange Commission to launch a space-exploration exchange-traded fund. ARK didn’t identify what companies it would hold in the fund. Delta Air Lines (DAL) stock was up 3.3% after the company reported revenue of $3.5 billion, missing expectations for $3.6 billion, and an adjusted loss per share of $2.53, which was larger than forecasts for a $2.50 loss. BlackRock (BLK) was down 3.6% after the asset management giant reported a fourth-quarter profit of $10.02, beating forecasts for $9.19, on sales of $4.5 billion, against estimates of $4.3 billion. Intel (INTC) rose 4.2% after getting upgraded by at least four different firms following Wednesday’s announcement of a CEO change. Marathon Oil (MRO) jumped 7.7% after Truist upgraded the stock to Buy from Hold. Nordstrom (JWN) fell 1.2% after Telsey Advisory Group downgraded the stock to Market Perform from Outperform. FuelCell Energy (FCEL) stock dropped 10.3% after getting cut to Underweight from Neutral at JPMorgan. Beyond Meat (BYND) stock jumped 10.8% after Yum Brands’ Taco Bell said it would begin testing a plant-based protein from the company. Yum stock (YUM) rose 2%.