Tuesday January 19th

19-01-2021

Dow futures jump 200 points on better-than-expected Goldman earnings, stimulus hopes

U.S. stock index futures jumped on Tuesday, pointing to a rebound from a rough week, as investors cheered stellar earnings Goldman Sachs as well as signals for another big stimulus and faster pace of vaccine distribution ahead. Futures contracts tied to the Dow Jones Industrial Average rose 200 points, or 0.7%. S&P 500 futures added 0.8%. Nasdaq 100 futures gained 1%. Shares of Goldman jumped 2.7% in premarket trading after the bank topped expectations for fourth-quarter profit and revenue. The blowout results came on the back of strong performance from its equities traders and investment bankers. Bank of America dipped more than 1% in premarket after the bank posted quarterly revenue that missed expectations. Earnings came in slightly ahead of estimate, however. “We expect investors will look through 4Q results and focus on company commentary about the trajectory of recovery in 2021,” David Kostin, Goldman’s head of U.S. equity strategy, said in a note. “As investors look to 2021, policy remains a key driver for corporate profits.” Janet Yellen, President-elect Joe Biden’s designated nominee for Treasury Secretary and a former chair of the Federal Reserve, will appear before the Senate Finance Committee on Tuesday. Yellen’s prepared remarks call for the federal government to enact a large stimulus to help the economy. “Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big,” said Yellen in prepared remarks. “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.” Stocks that would benefit most from further stimulus and faster vaccine rollout led the gains in premarket trading. Shares of Norwegian Cruise Line Holdings were up 3%. Boeing was up 2.8% in premarket trading. American Airlines was up 2.5% in early trading. Some tech shares also rebounded from their losses last week. Stocks are “likely poised to resume upside, after ending a healthy consolidation,” wrote Fundstrat’s Tom Lee in a note, citing an increase in the pace of vaccinations and eventual rollover in coronavirus cases. Dr. Rochelle Walensky, President-elect Joe Biden’s pick to lead the Centers for Disease Control and Prevention, said Sunday that she’s confident the U.S. will have enough vaccine doses to meet the incoming administration’s goal of inoculating 100 million people in 100 days. The move in futures comes after a slump for equities last week. The S&P 500 lost 1.5% for its first weekly loss in three, while the Dow and the Nasdaq Composite slid 0.9% and 1.5%, respectively, both posting their first negative week in five. The market fell slightly last week even as Biden unveiled his $1.9 trillion plan for economic relief as the country tries to get a handle on the Covid-19 pandemic. Biden is set to be inaugurated on Wednesday, with the National Guard in Washington amid heightened security concerns after a Jan. 6 riot at the U.S. Capitol. “In the week ahead, global economic data and U.S. earnings reports will be plentiful, but what matters is whether President Elect Biden’s Inauguration on 1/20 occurs peaceably and whether Republicans in the Senate send signals of constructive cooperation or of a 2020 replay,” BTIG chief equity and derivatives strategist Julian Emanuel said in a note to clients on Sunday. The U.S. stock market was closed on Monday in honor of Martin Luther King Jr. Day. Stocks in Asia-Pacific were mixed on Tuesday as investors waited for remarks from U.S. President-elect Joe Biden’s nominee for Treasury secretary, Janet Yellen. Hong Kong’s Hang Seng index led gains among the region’s major markets, jumping 2.7% to close at 29,642.28. South Korea’s Kospi also saw robust gains, rising 2.61% to close at 3,092.66 as shares of automaker Hyundai Motor surged 8.51%. Mainland Chinese stocks, on the other hand, lagged as they closed lower: The Shanghai composite declined 0.83% to 3,566.38 while the Shenzhen component dropped 1.737% to about 15,003.99. In Japan, the Nikkei 225 jumped 1.39% to close at 28,633.46 while the Topix index advanced 0.56% to finish its trading day at 1,855.84. Oil prices climbed on Tuesday as optimism that government stimulus will eventually lift global economic growth and oil demand trumped concerns that renewed COVID-19 pandemic lockdowns globally are cooling fuel consumption. Brent crude futures for March rose 70 cents to $55.45 a barrel after slipping 35 cents in the previous session. “The perception that any retracement will be quick as confidence in economic and oil demand recovery is unlikely to fade away,” said PVM analysts in a note. U.S. West Texas Intermediate crude was at $52.60 a barrel, up 24 cents. There was no settlement on Monday as U.S. markets were closed for a public holiday. Front-month February WTI futures expire on Wednesday. Gold edged higher on Tuesday from the last session’s 1-1/2 month low as the dollar eased off highs ahead of U.S. Treasury Secretary nominee Janet Yellen’s speech later in the day, when she is expected to raise the case for more fiscal spending. Spot gold rose 0.3% to $1,842.46 per ounce, recovering from its lowest since Dec. 2 at $1,809.90 hit on Monday. U.S. gold futures gained 0.7% to $1,842.70.