All the major indexes are once again roughly flat near their record highs as investors continue to eye a Thursday stimulus announcement that should help calm uncertainty over the incoming administration’s policy agenda–and what that could mean for stocks.
Shortly after the market open, the Dow Jones Industrial Average was up just 14 points, or less than 0.1%, while the S&P 500 and tech-heavy Nasdaq also climbed just 0.1% each.
Though they were on track for gains, stock futures slipped in the early morning due to some “likely anxiety about the upcoming [administration’s] economic agenda,” said Vital Knowledge Media Founder Adam Crisafulli, pointing to a late-Tuesday report from the New York Times about the role progressive Sen. Bernie Sanders (I-Vt.) could play in fiscal policy after Inauguration Day.
That’s when the progressive senator is set to start heading up the powerful Senate Budget Committee, which oversees the massive federal budget that spurred weeks of disagreements before the new year; Sanders has promised to take “aggressive” stances on climate change, healthcare and taxes–much to the chagrin of Republicans and the market.
Meanwhile, the U.S. Consumer Price Index, the most widely used measure of domestic inflation, increased 0.4% in December after rising 0.2% in November, the Bureau of Labor Statistics reported Wednesday, driven largely by a 8.4% increase in gas prices.
Prices have climbed 1.4% over the past 12 months–fairly below the Federal Reserve’s longtime annual inflation target of 2% and therefore likely to temper some concerns over spiking inflation (at least temporarily).
On the earnings front, Big Lots shares are falling 8% after the retailer reported a worse-than-expected 8% increase in comparable-store sales, while Target previewed a better-than-expected increase of 17% (its shares are flat).
Shares of Intel, on the other hand, are surging 13%–hitting their highest levels in six months–after the chipmaker said it will replace its current CEO with Patrick Gelsinger, a former Intel executive and the current CEO of software firm VMware; in the S&P, energy firms TechnipFMC and Dupont De Nemours are heading up losses, falling 4% and 2%, respectively.
“The House will vote to impeach President Donald Trump today, but this doesn’t have much bearing on markets. The next really important event will come Thursday, when Biden is scheduled to outline his economic stimulus proposal,” Crisafulli said Wednesday morning. “Investors are looking for something worth around $2 trillion, but markets may be reaching a point where stimulus isn’t an unmitigated positive given the rise in yields; a blockbuster, deficit-funded stimulus bonanza could push yields up even more, undercutting last year’s multiple expansion in the S&P.”
Global markets were mixed Wednesday. Japan’s Nikkei 225 ended the day up 1%, while Hong Kong’s Hang Seng Index slipped 0.1%. In Europe, the United Kingdom’s FTSE 100 and France’s CAC 40 are down 0.1% and 0.2%, respectively, while Germany’s DAX Index is virtually flat.
What To Watch For
Earnings are set to really ramp up starting Thursday, when Delta Air Lines posts before the market opens. Big banks will head up many of the early reports, with Charles Schwab and BlackRock also reporting Thursday, followed by JPMorgan Chase, Wells Fargo and Citigroup Friday. On the economic front, retail sales are slated for Friday morning.
‘Elections Have Consequences’: Goldman Sachs Makes 6 Big Predictions For The Economy This Year (Forbes)
Democrats In Control Could Usher In A Full Economic Recovery And Another $1 Trillion In Stimulus, But Here’s The Catch (Forbes)
10.7 Million Americans Are Still Unemployed—Rate Stays Flat At 6.7%, But Economy Loses 140,000 Jobs (Forbes)
Stocks Flat Near Record Highs As Earnings Ramp Up Ahead Of Big Economic Releases (Forbes)