US stocks gain ahead of Biden inauguration

Marco Green
January 21, 2021

Stronger-than-expected earnings from Procter & Gamble, UnitedHealth Group, United Airlines and Morgan Stanley will likely provide the market with direction heading into the opening bell, with contacts tied to the Dow Jones Industrial Average now indicting a 110 point gain.

Biden will waste little time turning the page on the Trump era, aides said, signing a raft of 15 executive actions in the afternoon on issues ranging from the COVID-19 pandemic to the economy to climate change.

The hope on Wall Street is that such stimulus will help carry the economy until later this year, when more widespread COVID-19 vaccinations get daily life closer to normal.

As earnings reports pick up, focus is likely to center on sectors most exposed to the USA economy, such as banks and energy companies, and those which have suffered the most during the pandemic, such as leisure and hospitality, said Hugh Gimber, a strategist at J.P. Morgan Asset Management. Main urban areas in Japan, including Tokyo, are under a state of emergency, with evening dining at restaurants discouraged.

Europe's Stoxx 600 was marked 0.66% higher in the early hours of trading, while Britain's FTSE 100 added 0.28% even as the pound climbed to 1.3690 against a weaker USA dollar.

The broad-based S&P 500 has risen about nine per cent since Biden was declared the victor of the November election, which came just ahead of regulatory approvals of the first Covid-19 vaccines. Analysts came in with low expectations, forecasting the big companies in the S&P 500 will report a fourth straight drop in earnings per share because of the damage from the pandemic.

Among individual companies, Netflix shot up 16.9 per cent after it reported better-than-expected subscriber growth in the past quarter.

Global stocks power higher on USA stimulus hopes ahead of Biden inauguration as Yellen lays out economic ambitions of new administration. But the vast majority of the earliest reports have managed to top forecasts.

Wall Street marked the dawn of President Joe Biden's administration with stocks rallying to record highs as hopes build that new leadership in Washington will mean more support for the struggling US economy. The bump for stocks between the most recent Election Day and Biden's inauguration was 14.3%, bigger than the 4.8% boost for the market before Trump's inauguration. It also said it made more in revenue during the end of 2020 than analysts expected, though its earnings fell short of forecasts.

Yellen tells lawmakers to "go big" on stimulus, which, coupled with low rates, will help heal the "scar tissue" left by the coronavirus pandemic.

"We think that global growth is going to continue to pick up", she said.

WTI futures contracts for March delivery were marked 52 cents higher at $53.50 in early European trading, while Brent contracts for the same month, the global benchmark, added 44 cents to $56.35 per barrel. Brent crude, the worldwide standard, fell 19 cents to $55.89 a barrel.

In currency trading, the US dollar slipped to 103.52 Japanese yen from 103.76 yen.

AP Business Writers Stan Choe, Damian J. Troise and Alex Veiga contributed.

Other reports by Click Lancashire

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