U.S. stocks gained Thursday as traders shook off Wednesday’s unrest in Washington and looked ahead to the policy implications of the incoming presidential administration and Congress. Optimism over more stimulus under a unified Democratic government stoked a risk-on mood.
The S&P 500 gained more than 1% to reach a record high, and the Dow also rose to a record intraday level. The Nasdaq recovered Wednesday’s losses, outperforming with a jump of more than 2% to break above 13,000 and hit a fresh record high. Credit Suisse on Thursday upgraded its 2021 price target on the S&P 500 to 4,200 from 4,050, citing an improving stimulus outlook as cause for the more bullish call.
Overnight, Congress certified President-elect Joe Biden’s victory in the Electoral College and formally recognized him as the next president, with lawmakers reconvening hours after protesters supporting President Donald Trump swarmed inside the Capitol and forced the building to lock down and lawmakers to evacuate.
“When I look at the market reaction here … there is a recognition here that there is a certain inevitability in terms of what happens on January 20,” Raymond James analyst Ed Mills told Yahoo Finance on Wednesday. “It’s not as if there’s a situation based upon any protest that keeps Donald Trump as president at this point.”
“The market is more focused on, what are the policies of the next two years with the Congress that was voted in with the final election last night? What are the policies over the next four years?” Mills added. “They’re looking at COVID, they see vaccines being distributed. They are looking at a reopening.”
Wednesday afternoon, the Associated Press reported Democrat Jon Ossoff was the winner of the second Georgia Senate runoff election, defeating incumbent Republican David Perdue. Democrat Raphael Warnock was called as the victor of the Senate race against incumbent Republican Kelly Loeffler earlier in the day. This gave Democrats a very narrow majority in the chamber when considering Vice President-elect Kamala Harris’s ability to cast tie-breaking votes.
Financial, materials and energy stocks extended gains as prospects amid the Democratic sweep, given assumptions that a unified Democratic government would advance more virus-relief stimulus and increase infrastructure spending.
“Our U.S. economists have indicated that a Democratic Senate would likely lead to another large fiscal stimulus package, possibly including some priorities of the new administration such as infrastructure,” Deutsche Bank economists said in a note Wednesday. “They see that as a material upside to their GDP forecast, which they currently see rising 4.3% Q4/Q4 in 2021.”
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4:03 p.m. ET: S&P 500, Dow and Nasdaq rally to record levels as Wall Street anticipates more stimulus under incoming administration
Here were the main moves in markets as of 4:03 p.m. ET:
Gold (GC=F): +$6.70 (+0.35%) to $1,915.30 per ounce
10-year Treasury (^TNX): +2.9 bps to yield 1.0710%
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1:41 p.m. ET: Tesla’s market capitalization briefly tops that of Facebook as stock hits another record high
Tesla’s (TSLA) market capitalization briefly overtook Facebook’s intraday on Thursday after shares of the electric-car maker rallied more than 7% to a record high. At session highs, Tesla shares rallied to $811.61 to give the company a market cap of $769 billion, exceeding Facebook’s $765 billion, according to Bloomberg data.
Shares of Tesla have risen more than 750% over the last 12 months.
Other electric-vehicle makers also saw their stocks rally on Thursday amid assumptions that a unified Democratic government would prioritize innovation and investment in clean energy. Workhorse Group (WKHS) shares increased more than 15% Thursday, while QuantumScape (QS), an EV-battery maker, rose 3%.
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1:30 p.m. ET: Bitcoin rallies further, hits $40,000 for the first time ever
The cryptocurrency surged nearly 300% in 2020 to close in on $30,000 by year-end, far outperforming the S&P 500 with a 16% rise. It took less than a week for Bitcoin to surpass both the $30,000 and $40,000 levels.
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11:33 a.m. ET: Stocks extend gains, indices hit record highs
The three major indices each hit record intraday levels Thursday before noon.
Here were the main moves in markets, as of 11:33 a.m. ET:
S&P 500 (^GSPC): +57.15 points (+1.52%) to 3,805.29
ISM’s services purchasing managers’ index (PMI) came in at 57.2 for the month following a print of 55.9 in November. Consensus economists were looking for a the index to read 54.5 in December, according to Bloomberg data.
The increase came as new orders, supplier deliveries and inventories increased markedly in the service sector in December. A subindex tracking services employment however, dipped back into contractionary territory, or below the neutral level of 50.0.
“The headline services reading received an artificial boost from a jump in the supplier deliveries component, which reflects virus-related disruption rather than stronger demand,” Andrew Hunter, senior U.S. economist for Capital Economics, said in an email Thursday. “But the business activity and new orders components also picked up, which is at odds with the generally downbeat tone of the comments in the press release and with the recent dips in the other services-sector surveys, including most of the regional Fed indices and the Markit services PMI.”
“While both of last month’s ISM surveys have been much better than expected, we already know that real consumption fell in November and the latest high-frequency data point to a further decline in December,” he added.
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9:34 a.m. ET: Stocks open higher
Here were the main moves in markets, as of 9:34 a.m. ET:
S&P 500 (^GSPC): +31.15 points (+0.83%) to 3,779.29
8:30 a.m. ET: New jobless claims unexpectedly fell last week
New jobless claims unexpectedly steadied below 800,000 at the turn of the new year but still held at a historically elevated level, as the labor market struggled to regain traction amid the ongoing pandemic.
New weekly unemployment claims came in at 787,000 for the week ended January 2, the Labor Department reported Thursday morning, topping estimates for an increase to 800,000. The prior week’s level was revised up by 3,000 to 790,000. New jobless claims had topped 800,000 for three of the four full weeks of December.
Continuing claims, measuring all individuals still on regular state unemployment programs, unexpectedly fell more than expected to nearly 5.1 million.
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7:43 a.m. ET: ‘Markets might care about impeachment’: UBS
“There are media reports that the 25th Amendment of the Constitution may be invoked, or that fresh impeachment proceedings could be launched against US President Trump,” UBS economist Paul Donovan said in a note Thursday. “This would probably not impact policy, but markets might care about impeachment (as conviction could bar US President Trump from future office).”
But the events of Wednesday could also have a psychological impact on investors as well, he added.
“Many international investors come from countries with very different experiences of democracy, regime change, and the stability of the nation state from that of the United States,” Donovan said. “It is perhaps inevitable that such investors will view events in the US through the prism of their own experiences, and this may increase the risk that they see in U.S. assets.”
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7:22 a.m. ET Thursday: Stocks point to a higher open, Nasdaq looks to recover some losses
Here were the main moves in markets, as of 7:22 a.m. ET Thursday:
S&P 500 futures (ES=F): 3,753.5, up 13 points or 0.35%
Dow futures (YM=F): 30,780.00, up 60 points or 0.2%
Nasdaq futures (NQ=F): 12,707.00, up 90.25 point or 0.72%
6:06 p.m. ET Wednesday: Stock futures open mostly higher
Here were the main moves in markets, as of 6:06 p.m. ET Wednesday:
S&P 500 futures (ES=F): 3,753.25, up 12.75 points or 0.34%
Dow futures (YM=F): 30,793.00, up 73 points or 0.24%
Nasdaq futures (NQ=F): 12,672.5, up 55.75 point or 0.44%
WASHINGTON, DC - JANUARY 06: Protesters gather on the second day of pro-Trump events fueled by President Donald Trump's continued claims of election fraud in an to overturn the results before Congress finalizes them in a joint session of the 117th Congress on Wednesday, Jan. 6, 2021 in Washington, DC. (Kent Nishimura / Los Angeles Times via Getty Images)
