Weekly Market Review – January 22nd

January 19th, 2021

US stocks have been pushing upwards today. The Dow rose 0.44% and S&P 500 rose 0.6%. Ten-year Treasury yields climbed back to 1.1% and the dollar weakened. Goldman Sachs and Bank of America shares slipped even after profits were reported to be strong. 

Janet Yellen’s Confirmation Hearing

Janet Yellen is poised to be the Treasury Secretary nominee as her confirmation hearing begins. Yellen encouraged lawmakers to take more action, now that borrowing costs are low. There is potential for the Treasury and the Fed to work more closely together. Yellen used to be the chair of the Federal Reserve, so her ideas will carry weight in both organizations. Investors have more encouragement to take risks, as the incoming Biden administration will intervene more in the economy to stimulate growth. 

January 20th, 2021

The S&P 500 rose to an all-time high, rising 1.1% to over 3,800 points. The Nasdaq Composite rose 1.8% to a record, led by Netflix shares. The Dow rose 0.6% to over 31,000 again. Netflix reported strong subscriber growth, a net growth of 8.5 million people, better than the expected 6.47 million. 

Biden’s Inauguration 

President Joe Biden called for unity during his speech. He made fighting the pandemic, economic recovery, racial justice, and climate protection his priorities. He also mentioned making healthcare affordable and improving the education system. He framed the recent issues in the US as a test of strength and hope and he believed that the American people would step up and pass the test. Biden tried to convey optimism during his speech and restore faith in democracy. 

The stock market will benefit from the ideas outlined in Biden’s speech. He implied that the government would continue increasing spendings in the short term. 

January 21st, 2021

Stocks were relatively steady today. The optimism garnered by Biden’s presidency was dampened by disappointing unemployment data. More than 1 million people had filed for unemployment benefits, the first time this has happened since July 2020 (Axios, 2021). There was an increase of over 230,000 traditional claims and more than 123,000 filing for Pandemic Unemployment Insurance. 

Biden’s Executive Orders

Biden signed a number of executive orders on his first day as president. He halted the construction of the border wall, the Keystone XL pipeline, and overturned Trump’s executive order restricting migration from certain majority-Muslim countries. Biden began the process of rejoining the WHO and the Paris Accord on climate change. He also sent a proposal to Congress that would provide a pathway to citizenship for undocumented immigrants living in the United States, strengthen border security, and address root causes of illigal migration into the US. 

January 22nd, 2021

The Dow fell by 222 points or 0.71%, while the S&P 500 and the Nasdaq Composite fell 0.47% and 0.35% respectively. Energy stocks played a role in driving down the market, due to President Biden’s planned regulations on US oil leases. Intel earnings also proved disappointing, as profits fell 0.9% from the year before. 

Relief Talks Stall

Republican Senators Mitt Romney and Lisa Murkowski suggested that it was too early to ascertain if the economy would benefit from Biden’s $1.9 trillion stimulus package. They would prefer to examine the effects of Trump’s $900 billion relief package from the month. Considering the inefficiencies posed by Trump’s relief packages in the past with people who do not need the money pocketing it anyway, it would arguably be more important for Biden to ensure that the additional money is given to people who truly are in need of it rather than giving more to everyone. Additional spending and a larger government would increase debts, and Biden has to deliver on very strong economic growth to mitigate the debt for the future.