Stocks hit record on hopes Biden will act on economy, virus

Jessica Menton
 
| USA TODAY
Joe Biden wipes away tears as he departs for White HousePresident-elect Joe Biden fought back tears as he thanked Delawareans for their support before heading to his inauguration.Associated Press, USA TODAYStocks touched all-time highs Wednesday during Joe Biden’s inauguration as the 46th U.S. president, with shares rising on hopes that the new administration will provide another dose of support for an economy still reeling from high unemployment and business closures caused by the coronavirus pandemic.The Dow Jones Industrial Average climbed nearly 200 points. The S&P 500 was 1.1% higher at 3,841 in midday trading, topping its record closing level of 3,824.68 set earlier this month. The technology-heavy Nasdaq Composite jumped 1.7%.Stocks have been rising on enthusiasm about a coming economic recovery as more people are inoculated with COVID-19 vaccines and Washington gets set to try for another round of economic stimulus.“The market is motivated by two primary influences: the success of vaccine distribution and the economic plan which Biden rolls out,” Kevin Philip, managing director at Bel Air Investment Advisors, a wealth adviser, said in a note. “The economic plan from the incoming administration, bolstered by Democratic control of Congress, is likely to be profoundly accommodative to economic growth and the stock market.”More stimulus?: Here’s how a Biden plan could impact wages, stimulus payments and unemployment checksBase pay: To keep pressure on Joe Biden and Congress, fast-food workers plan to strike for higher minimum wageJanet Yellen, Biden’s nominee for Treasury secretary, told the Senate Finance Committee during her confirmation hearing Tuesday that the incoming administration would focus on winning quick passage of its $1.9 trillion pandemic relief plan.The plan would include $1,400 cash payments for most Americans. Democrats are also pushing for faster rollout of COVID-19 vaccines, a higher minimum wage for workers and enhanced benefits for laid-off workers. The hope is that another stimulus can carry the economy until later this year, when more widespread vaccinations get life returning to some semblance of normal.“With Yellen in charge and with an economy that needs a shot in the arm, I think we can expect massive spending combined with continued ultra-low interest rates for years,” Nigel Green, chief executive and founder of financial consultancy deVere Group, said in a note. “This will act as a catalyst for stock markets.”To be sure, Biden’s Democratic allies will have control of the House and Senate, but only by the slimmest of margins in the Senate. That could hinder chances of the plan passing.“It is possible that if the (executive) orders are not radical and the negotiations are without blame-game rancor, he could get enough Republicans to pass about half of his fiscal requests, which would be positive for the markets,” John Vail, chief global strategist at Nikko Asset Management, an investment management company, said in a note.“There is a major debate as to whether many of his programs for a second stimulus bill can be legally passed through the Reconciliation process, so we will watch such, although it may take quite a while,” Vail added.The yield on the 10-year Treasury rose to 1.09% from 1.07% late Tuesday.Shares of Netflix rallied 13% after the company said it would no longer need to borrow billions of dollars to finance its TV shows and movies.Morgan Stanley rose 2% after the bank reported a stronger-than-expected quarterly profit driven by its trading business. Bank stocks had run up in prior weeks on expectations that a stronger economy later this year and higher interest rates would mean bigger profits from making loans.Procter & Gamble’s stock was little changed after the consumer products company lifted its full-year sales forecast for a second time, fueled by higher demand for its cleaning products.In Europe, France’s CAC 40 added 0.2%, while Germany’s DAX rose 0.2%. Britain’s FTSE 100 edged up 0.1%. Elsewhere, Japan’s benchmark Nikkei 225 slipped 0.4%. Hong Kong’s Hang Seng jumped 1.1%, while the Shanghai Composite rose 0.5%.Contributing: The Associated Press


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