Stocks climbed for a second day on Wednesday ahead of President-elect Joe Biden’s inauguration, while a slew of strong corporate earnings boosted sentiment on Wall Street.
The Dow Jones Industrial Average rose 100 points. The S&P 500 advanced 0.6% and the tech-heavy Nasdaq Composite jumped 1% to a record high amid a pop in Netflix shares.
Netflix soared more than 13% after the company reported strong subscriber growth and said it’s considering share buybacks. Netflix handily beat estimates for global paid net subscriber additions, reporting 8.5 million versus the 6.47 million analysts anticipated. The company also said it expects to be break even on a cash flow basis this year.
Shares of streaming-competitor Disney jumped more than 2% following Netflix’s strong subscriber numbers.
Morgan Stanley gained 2.2% after earnings and revenue topped estimates on solid trading and wealth management results.
Procter & Gamble raised its forecast and said revenue last quarter jumped on higher pandemic demand for cleaning products. The stock traded 1% lower, however.
“We’re off to a pretty solid start to earnings season,” said Chris Larkin, managing director of trading and investing product at E-Trade Financial. “What’s more encouraging is the positive guidance companies are projecting. So despite some inevitable bumps in the road, traders and corporate America alike are starting to see the light at the end of the tunnel.”
Biden will succeed President Donald Trump as the 46th president of the United States shortly after noon ET. His inauguration speech will focus on the need to bring the country together on the heels of a violent riot on Capitol Hill and amid extreme partisanship in Congress.
Investors will also be on the lookout for any further information about Biden’s $1.9 trillion Covid-19 relief plan unveiled last week. On Tuesday, Janet Yellen, Biden’s designated nominee for Treasury Secretary, endorsed higher aid spending and urged lawmakers to “act big.”
“Everything else could take a back seat to events in Washington as investors look ahead to big changes in policy and outlook from a new administration,” TD Ameritrade’s chief market strategist JJ Kinahan said.
Wall Street started the week with modest gains. The Dow rose more than 100 points on Tuesday, while the S&P 500 gained 0.8%, snapping a two-day losing streak. The Nasdaq Composite rallied 1.5% as big technology stocks rebounded from last week’s sharp losses.
Biden’s stimulus proposal calls for direct payments of $1,400 to most Americans as well as additional unemployment benefit as well as state and local government aid. He also announced a sweeping plan to combat the pandemic in the U.S., which includes a nationwide vaccine campaign.
The U.S. has fallen far short of its goal of vaccinating 20 million people by the end of last year. While the Trump administration’s Operation Warp Speed has delivered over 31.1 million doses across the country, only 12.3 million people have been inoculated.
“I believe we will be able to turn the page,” Invesco Chief Global Market Strategist Kristina Hooper said. “I expect markets to continue to move in expectations of a robust recovery later in 2021 when vaccines are broadly distributed.”
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