Stocks rose Tuesday as traders returned from a long holiday weekend in the U.S. and eyed signs of mounting support for significant fiscal stimulus out of Washington.
Each of the three major indexes advanced, and the Nasdaq outperformed with a jump of more than 1%. Bank stocks were mostly higher after Dow-component Goldman Sachs (GS) posted fourth-quarter results that handily exceeded expectations, even as Bank of America’s (BAC) quarterly report largely disappointed.
On Tuesday, the Senate Finance Committee held a hearing for President-elect Joe Biden’s nomination of Janet Yellen for Treasury Secretary, in one of the closely watched Cabinet confirmation hearings of the week. In her remarks, Yellen advocated for major fiscal action to help support the virus-stricken economy, and told Congress to “act big” when it came to more aid. In a wide-ranging dialogue with lawmakers, Yellen also said she would support the Biden administration’s goals of tackling climate issues, and addressing “unfair and illegal practices” out of China.
Prospects of additional fiscal stimulus have buoyed stocks over the past couple weeks, and have come alongside Federal Reserve officials’ commitments to keeping monetary policy easy during the pandemic period. These moves have in turn helped keep an anchor on interest rates – though the recent creep higher in the benchmark 10-year yield in tandem with still-rising stock prices has begun to give some traders pause.
“The sharp rise in the price of some risky assets has become the focal point of market concerns over the past couple of weeks, but the valuations of most assets still look justifiable in the context of ultra-low real interest rates,” Capital Economics economist Neil Shearing said in a note Monday. “Viewed this way, the more important question is whether real interest rates will remain at their current rock-bottom levels. We think they will — and even if we’re wrong the implications for risky assets would depend in part on why they rise.”
Later this week, traders will turn their attention to the first actions of the incoming Biden administration, with Inauguration Day taking place on Wednesday. That day, Biden is set to sign about a dozen executive actions to address the pandemic, virus-stricken economy, climate change and racial equity, according to a memo from incoming White House Chief of Staff Ron Klain. Among a number of orders, Biden plans to extend a pause on student loan payments and interest on federal loans, rejoin the Paris Agreement, and issue a mask mandate on federal property and interstate travel. Biden also plans to sign additional executive orders in his initial 10 days in office, Klain noted.
4:02 p.m. ET: Stocks jump, tech shares outperform after Yellen calls on Congress to ‘act big’ with virus relief aid
Here were the main moves in markets as of 4:02 p.m. ET:
S&P 500 (^GSPC): +30.66 (+0.81%) to 3,798.91
Dow (^DJI): +116.26 (+0.38%) to 30,930.52
Nasdaq (^IXIC): +198.68 (+1.53%) to 13,197.18
Crude (CL=F): +$0.64 (+1.22%) to $53.00 a barrel
Gold (GC=F): +$9.40 (+0.51%) to $1,839.30 per ounce
10-year Treasury (^TNX): -0.5 bps to yield 1.0920%
1:12 p.m. ET: Stocks hold higher, energy sector leads gains
The three major indices extended gains in intraday trading, with the Dow up more than 150 points, or 0.5%. The Nasdaq outperformed with a jump of more than 1% as each of the Big Tech FAANG names – Facebook, Apple, Amazon, Netflix and Alphabet – surged intraday. The energy and communication services sectors led gains in the S&P 500, and crude oil prices jumped more than 1%.
Here’s where markets were trading, as of 1:12 p.m. ET:
S&P 500 (^GSPC): +32.63 (+0.87%) to 3,800.88
Dow (^DJI): +166.92 (+0.54%) to 30,981.18
Nasdaq (^IXIC): +180.08 (+1.39%) to 13,177.96
Crude (CL=F): +$0.56 (+1.07%) to $52.92 a barrel
Gold (GC=F): +$11.40 (+0.62%) to $1,841.30 per ounce
10-year Treasury (^TNX): -0.3 bps to yield 1.094%
11:01 a.m. ET: Yellen says U.S. must ‘take on China’s abusive, unfair and illegal practices’
Yellen, during her confirmation hearing before the Senate Finance Committee, told Democratic Senator Ron Wyden of Oregon that she would push to bolster the Biden administration’s goal of mobilizing U.S. allies to work together to deal with China’s “unfair and illegal practices.”
“China is clearly our most important strategic competitor. As you said, we need to work with allies, we also need to strengthen our own economy so we can compete,” Yellen said. “And President-elect Biden will soon come forward with a package to accomplish that by investing in our infrastructure, investing in our people and creating a more competitive economy.”
“We need to take on China’s abusive, unfair and illegal practices. China is undercutting American companies by dumping products, erecting trade barriers and giving illegal subsidies to corporations. It’s been stealing intellectual property and engaging in practices that give it an unfair technological advantage, including forced technology transfers.”
“These practices, including China’s low labor and environmental standards, are practices that we’re prepared to use the full array of tools to address,” she said.
10:45 a.m. ET: Yellen calls for more stimulus, commits to working to ‘build back better’ during confirmation hearing in the Senate
Janet Yellen, former Chair of the Federal Reserve and President-elect Joe Biden’s pick for Treasury Secretary, began her confirmation hearing before the Senate Finance Committee Tuesday morning.
In prepared remarks, Yellen called for the further action from Congress to help alleviate some of the economic devastation caused by the pandemic.
“Neither the President-elect, nor I, propose this relief package without an appreciation for the country’s debt burden,” Yellen said, referring to Biden’s proposed $1.9 trillion package. “But right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.”
“I will be focused from day one on providing support to America’s workers and to small businesses, putting into effect as quickly and efficiently as I can the relief in the bill that was recently passed, and then over time working for a second package that I think we need to get through these dark times before the vaccination program enables us to go back to life as we knew it,” she added in response to a question from Republican Senator Chuck Grassley of Iowa. “But over time, I look forward to working with President-elect Biden and his team to build back better and to address many of the challenges that we face in America that have had such an adverse impact on America’s workers and small businesses.”
9:30 a.m. ET: Stocks rise, Dow gains 200+ points, or 0.7%
Here’s where markets were trading just after the opening bell on Tuesday:
S&P 500 (^GSPC): +27.69 (+0.73%) to 3,795.94
Dow (^DJI): +223.32 (+0.72%) to 31,037.58
Nasdaq (^IXIC): +135.53 (+1.08%) to 13,138.48
Crude (CL=F): +$0.58 (+1.11%) to $52.94 a barrel
Gold (GC=F): +$9.70 (+0.53%) to $1,839.60 per ounce
10-year Treasury (^TNX): +1.7 bps to yield 1.114%
8:28 a.m. ET: Bank of America posts mixed quarterly results as lending, fixed-income trading come up short
Bank of America (BAC) posted mixed fourth-quarter results on Tuesday, topping consensus estimates for profit while posting weaker-than-expected revenue. Shares fell more than 1.5% in early. trading.
Loans during the quarter dropped 2% to $913 billion as card balances and commercial loans each declined. And the bank’s fixed-income trading revenue – a strong area for most other major banks that have reported quarterly results so far – fell 5% to $1.7 billion. The unexpected weakness came as “weaker trading performance in macro products and mortgages outweighed gains in credit,” Bank of America said. Still, equities trading revenue jumped 30% to $1.3 billion.
Overall, revenue net of interest expense fell 10% over last year to $20.1 billion, coming up light compared to estimates for $20.5 billion. Earnings of 59 cents a share, however, were 4 cents ahead of expectations.
8:16 a.m. ET: Goldman Sachs shares jump in early trading as trading, banking results drive earnings beat
Goldman Sachs (GS) reported fourth-quarter results that handily surpassed Wall Street’s expectations, as the firm’s trading and investment banking businesses powered ahead during the COVID-19 pandemic.
Net revenues totaled $11.74 billion, growing 18% over last year and beating consensus estimates for $10.07 billion, according to Bloomberg data. Profit of $12.08 a share was also well above the $7.47 per share expected.
Investment banking revenue jumped 27% over last year to a quarterly record of $2.61 billion. Global markets revenue increased 23% to nearly $4.3 billion, driven by a 40% jump in equities trading alongside a 6% rise in fixed-income trading.
Shares of Goldman Sachs, a Dow component, rose 2% in early trading.
7:17 a.m. ET Tuesday: Stock futures point to a higher open
Here were the main moves in markets, as of 7:17 a.m. ET Tuesday:
S&P 500 futures (ES=F): 3,788.00 up 25.75 points or 0.68%
Dow futures (YM=F): 30,897.00, up 177 points or 0.58%
Nasdaq futures (NQ=F): 12,916.00, up 113.75 points or 0.89%
Crude (CL=F): +$0.17 (+0.32%) to $52.53 a barrel
Gold (GC=F): +$10.80 (+0.59%) to $1,840.70 per ounce
10-year Treasury (^TNX): +2.2 bps to yield 1.119%