The S&P 500 posted its best Inauguration Day return since Ronald Reagan’s second inauguration in 1985, according to an analysis by LPL Financial. And the index’s move from Election Day to Inauguration Day was its best ever, with the S&P 500 climbing more than 14% between Nov. 3 and Wednesday’s close.
“I’ve actually been very surprised by how the market has really brushed aside all the political issues that we’ve had in the first three weeks of the year. I would have assumed coming into the year that had the Democrats swept the Senate, the House and won the presidency that the markets would have sold off on the back of a potential increase in the corporate tax rate in the future,” John Petrides, portfolio manager at Tocqueville Asset Management, told Yahoo Finance. “Clearly I think investors are focused on the short term and Biden’s go-big policy on fiscal stimulus, which is clearly much needed as the COVID cases continue to rip through the U.S.”
Other strategists agreed that the prospects for additional stimulus have been a key driver of the pre-Inauguration spike. RBC Capital Markets on Wednesday introduced a price target of 4,100 on the S&P 500 for 2021, implying additional upside of about 6.4% from Wednesday’s close, to become the latest Wall Street firm to forecast another annual rise in the stock market this year.
Others noted that key personnel within the Biden Cabinet, including his nominee for Treasury Secretary Janet Yellen, are likely to help advance additional support out of Washington. The Senate Finance Committee is set to meet Friday to consider Yellen’s nomination, Reuters reported, after her hearing before the committee on Tuesday.
“We’re going to see not just bandaid stimulus which we’ve seen in the past, but real job creation stimulus,” Peter Tchir, head of macro strategy at Academy Securities, told Yahoo Finance. “And I don’t think we can underestimate the impact of Yellen. The market really started rallying [Tuesday] when Yellen was speaking ... I think she’s going to be very aggressive in her policies, she’s going to figure out more ways to work with the Fed, so I think there’s a lot of optimism on what she could do as well as part of this administration, assuming the confirmation goes fine.”
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4:06 p.m. ET: S&P 500, Nasdaq eke out fresh record highs as Biden announces more actions to combat COVID-19
Here were the main moves in markets as of 4:06 p.m. ET:
Gold (GC=F): +$4.40 (+0.24%) to $1,870.90 per ounce
10-year Treasury (^TNX): +1.9 bps to yield 1.1090%
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2:40 p.m. ET: United Airlines shares sink 5% after reporting another steep quarterly loss, projecting EBITDA margin recovery by 2023
United Airlines (UAL) sank more than 5% intraday on Thursday after the company swung to yet another quarterly loss in the fourth quarter, as the coronavirus pandemic continued to weigh on travel demand.
Adjusted losses totaled $7 per share in the final three months of 2020, compared to earnings of $2.67 during the same period a year ago. Operating revenue of $3.41 billion dropped 70%, and United said it expected current-quarter revenue to drop between 65% and 70% over the same period in 2019.
CEO Scott Kirby said during the company’s earnings call Thursday morning that “What [they] are confidence about is that the turning point is coming.”
“While our base case is that the turning point is coming a little bit later than maybe some others think, that turning point is coming, and it's going to come at the same time for all airlines,” he said.
United expects to return to 2019 EBITDA margins by 2023. In terms of demand, the company noted that leisure travel demand will likely come back more quickly sometime this year, followed by business demand over the next 18 to 24 months.
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11:41 a.m. ET: Bank of America raises Amazon price target to $4,000
Bank of America raised its price target on shares of Amazon (AMZN) to $4,000 from $3,650 on Thursday, implying additional upside of nearly 23% from Wednesday’s closing prices. Amazon shares rose 2% in intraday trading on Thursday.
Namely, the firm said it believed Amazon is now trading “at discount” when considering the trajectory of each of its disparate businesses, include cloud computing, e-commerce and advertising.
“Amazon was a COVID-beneficiary in 2020 (stock up 74%), but looking through tougher summer comps, we still see strong growth prospects with e-commerce penetration still low, a large uptick in fulfillment capacity, and ongoing shift to the cloud,” the analysts said in a note. “COVID-19 should accelerate cloud demand in 2021, and retail business margins have positive tailwinds (annualizing over $10bn in COVID-related costs). Despite strong 2020 Amazon stock performance, the advertising and e-commerce marketplace sectors did better; applying comp multiples to each of Amazon's segments would suggest further upside.”
Though Amazon outperformed the broader market over the course of 2020, it has underperformed in recent months. Shares of Amazon have fallen more than 5% since the beginning of September through Wednesday’s close, versus a gain of 10% in the S&P 500 over that time period.
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10:20 a.m. ET: Last week’s leap in new jobless claims was likely a ‘fluke’ due to seasonal adjustment issues: Economist
At 900,000, initial jobless claims came in another highly elevated level this past week, in another concerning sign of the state of the labor market amid the pandemic. Initial jobless claims have now come in at at least 900,000 for back-to-back weeks, after holding below that level in every week from late August to the start of this month.
Some economists, however, noted that seasonal adjustment issues were the primary cause of the early-January jump in new claims, and suggested the underlying trend was beginning to steady.
“The drop in jobless claims supports our view that last week’s leap was a fluke, due to seasonal adjustment problems which start over Thanksgiving and persist well into January,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in an email Thursday. “We expect claims to drop again next week, to about 750K; the trend rose late last fall as the third COVID wave built, but is is now about flat, albeit at a very high level.”
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9:30 a.m. ET: Stocks open higher after jobless claims, housing starts top estimates
Here were the main moves in markets shortly after the opening bell:
8:53 a.m. ET: New homebuilding reaches fastest pace in 14 years in December
Housing starts and building permits each accelerated in December, as demand for new homes outpaced supply and drove a surge in residential construction.
Housing starts jumped 5.8% in December over November to a seasonally adjusted annual rate of 1.669 million, the Commerce Department said Thursday. This marked the highest level since 2006, and handily topped estimates for a rise of less than 1% to a 1.56 million rate, according to Bloomberg data. In November, housing starts had increased 3.1% month-over-month.
Building permits, which indicate future homebuilding, unexpectedly spiked in December by 4.5%, reaching a seasonally adjusted annualized rate of 1.709 million. Consensus economists had expected a drop of 1.7% in permits, following November’s revised 5.9% monthly advance.
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8:30 a.m. ET: Jobless claims declined more than expected last week, but still held at elevated levels
Continuing claims, a measure of the total number of individuals still receiving regular state unemployment benefits, improved more than expected last week and have remained on a mostly steady downtrend since peaking at nearly 25 million in May. These totaled 5.054 million during the week ended January 9, beating estimates for 5.300 million expected and falling from a revised 5.181 million from the prior week.
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7:18 a.m. ET Thursday: Stock futures rise
Here’s where markets were trading as of 7:18 a.m. ET Thursday:
S&P 500 futures (ES=F): 3,855.50, up 10.5 points or 0.27%
Dow futures (YM=F): 31,173.00, up 77 points or 0.25%
Nasdaq futures (NQ=F): 13,355.5, up 61.25 points or 0.46%
Gold (GC=F): +$4.30 (+0.23%) to $1,870.80 per ounce
10-year Treasury (^TNX): unchanged to yield 1.0900%
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6:04 p.m. ET Wednesday: Stock futures drift
Here were the main moves in markets, as of 6:04 p.m. ET Wednesday.
S&P 500 futures (ES=F): 3,843.00, down 2 points or 0.05%
Dow futures (YM=F): 31,085.00, down 11 points or 0.04%
Nasdaq futures (NQ=F): 13,269.5, up 2.25 points or 0.02%
US President Joe Biden sits in the Oval Office as he signs a series of orders at the White House in Washington, DC, after being sworn in at the US Capitol on January 20, 2021. - US President Joe Biden signed a raft of executive orders to launch his administration, including a decision to rejoin the Paris climate accord. The orders were aimed at reversing decisions by his predecessor, reversing the process of leaving the World Health Organization, ending the ban on entries from mostly Muslim-majority countries, bolstering environmental protections and strengthening the fight against Covid-19. (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images)
