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Stocks Rise to Record on Hope for New Aid Bill: Markets Wrap

U.S. stocks rallied as investors grew optimistic that recent federal spending will revive growth and bolster corporate earnings. Treasuries were little changed while the dollar weakened.
Trading Inside Frankfurt Stock Exchange As Italian Political Uncertainty Trigger Financial Crisis Flashbacks A digital board shows the DAX Index curve inside the Frankfurt Stock Exchange, operated by Deutsche Boerse AG, in Frankfurt, Germany, on Wednesday, May 30, 2018. As the world ponders whether 2018 is when financial markets finally buckle after a nearly decade-long boom, there’s no shortage of potential crises to keep traders awake at night. Photographer: Alex Kraus/Bloomberg
Bloomberg
By Bloomberg
20 Jan 2021
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The Nasdaq 100 Index jumped more than 2% and the S&P 500 Index rose to an all-time high. The broader measure is poised for the best first-day reaction to an elected president’s inauguration since Jan. 20 became the official start in 1937. Netflix Inc. surged more than 13% after a jump in subscribers. Chipmaker ASML Holding NV rallied on solid results. Morgan Stanley gained after reporting record full-year results.

Investors also kept an eye on Washington, where Joe Biden was sworn in as president and delivered a call for unity. On Tuesday, Janet Yellen promoted a $1.9 trillion Covid-19 relief proposal to lawmakers as she seeks confirmation as Treasury secretary.

“The market is likely setting its sight more on the prospects of stimulus than anything else, born not just from Biden’s priorities but Yellen’s remarks on the Hill yesterday,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial.

In Asia, Chinese firms trading in Hong Kong saw the bulk of gains, and the Hang Seng Index approached the 30,000 level. Alibaba Group Holding Ltd. rallied after billionaire Jack Ma resurfaced from months out of public view amid escalating scrutiny over his internet empire.

Attempted dollar rebound fails to push through first technical resistance

Investors are counting on more spending to help propel economic growth under Biden, who is planning a flurry of executive orders on his first day. Still, it won’t be all smooth sailing, with Yellen encountering early Republican resistance to Biden’s relief plan in her confirmation hearing to become Treasury secretary.

Yellen -- who could be confirmed as soon as Thursday -- said that help for the unemployed and small businesses would provide the “biggest bang for the buck.” She urged lawmakers to act in efforts to rescue an economy battered by the coronavirus. She also said the U.S. is prepared to take on China’s “abusive” trade and economic practices, and that the Biden administration won’t pursue a weak dollar.

On the virus front, Germany suffered record daily deaths and a study on the South African variant raised concern about the efficacy of vaccines.

Elsewhere, crude oil edged higher and gold traded touched an almost two-week high.

These are some key events coming up:

  • Policy decisions are due Wednesday from central banks in Brazil and Canada. The Bank of Japan and the ECB deliver decisions Thursday.

Here are the main moves in markets:

Stocks

  • The S&P 500 Index increased 1.4% as of 2:08 p.m. New York time, the highest on record with the largest climb in almost two weeks.
  • The MSCI Asia Pacific Index gained 0.9% to 213.09, the highest on record.
  • The Nasdaq Composite Index gained 1.7% to 13,420.14, the highest on record with the largest climb in almost two weeks.
  • The Nasdaq 100 Index increased 1.9% to 13,246.17, the highest on record with the biggest climb in almost two weeks.
  • The Stoxx Europe 600 Index increased 0.7% to 410.78.

Currencies

  • The Bloomberg Dollar Spot Index declined 0.2% to 1,122.01.
  • The euro fell 0.2% to $1.2101.
  • The British pound was little changed at $1.3628.
  • The Japanese yen appreciated 0.3% to 103.57 per dollar, the strongest in two weeks on the largest gain in more than a week.

Bonds

  • The yield on 10-year Treasuries gained one basis point to 1.09%.
  • Britain’s 10-year yield gained one basis point to 0.297%, the highest in a week on the largest gain in more than a week.
  • Germany’s 10-year yield dipped less than one basis point to -0.53%.

Commodities

  • West Texas Intermediate crude gained 0.6% to $53.29 a barrel.
  • Gold strengthened 1.4% to $1,865.95 an ounce, the highest in almost two weeks on the biggest jump in more than two weeks.

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