Wall Street rises as Yellen speaks; spotlight on earnings
Wall Street’s main indexes rose on Tuesday on positive earnings updates from major U.S. lenders, while Treasury Secretary nominee Janet Yellen advocated for a hefty fiscal relief package before Senate lawmakers to ride out the world’s largest economy from a pandemic-driven slump.
At her confirmation hearing, Yellen said the benefits of a big package outweigh the costs of a higher debt burden.
President-elect Joe Biden, who will be sworn into office on Wednesday, outlined a $1.9 trillion stimulus package proposal last week to jump-start the economy and accelerate the distribution of vaccines.
“Janet Yellen is saying rates are low, let’s do huge stimulus to come out of this, and recover strong and the market likes that so far,” said Thomas Hayes, chairman of Great Hill Capital in New York.
“The overriding theme for the next 24 hours is big stimulus, big packages, big recovery going into the inauguration tomorrow.”
Bank of America climbed 1.4% as it also topped fourth-quarter profit estimates and joined JPMorgan, Citigroup Inc and Wells Fargo & Co in releasing some cash reserves to cover for coronavirus-driven loan losses, underscoring its confidence in the economy.
Big U.S. bank Goldman Sachs Group Inc’s fourth-quarter profit more than doubled, dwarfing estimates after another blowout performance at its trading and underwriting business.
Its shares fell 0.7% in choppy trading following a sharp surge over the last two weeks.
“These stocks need to just take a little breather before they resume their uptrend. They’re still dramatically undervalued in intermediate to long-term,” Hayes added.
Wall Street’s main indexes rallied to record highs recently on hopes of a speedy economic recovery fueled by a hefty fiscal stimulus package and vaccine distribution.
Eight of 11 S&P sectors advanced, with economy-linked energy, financial and industrials among the biggest gainers.
The defensive utilities, consumer staples and real estates were the only ones in the red.
At 12:08 p.m. ET, the Dow Jones Industrial Average rose 133.81 points, or 0.44%, to 30,948.09, the S&P 500 gained 23.34 points, or 0.62%, to 3,791.47 and the Nasdaq Composite gained 117.86 points, or 0.90%, to 13,116.36.
Tesla Inc gained 1.6% after Jefferies raised its earnings estimates ahead of the electric-car maker’s fourth-quarter results next week.
Boeing Co added 1.8% as Canada said it would lift a near two-year flight ban on its 737 MAX following two fatal crashes involving the model while a final clearance from Europe to resume flying the jet is expected next week.
Advancing issues outnumbered decliners by a 1.8-to-1 ratio on the NYSE and by a 1.8-to-1 ratio on the Nasdaq.
The S&P 500 posted 24 new 52-week highs and no new low, while the Nasdaq recorded 326 new highs and 10 new lows.