U.S. Stock Futures Edged Higher Ahead Of Yellen’s Testimony
I hope everybody has enjoyed the Martin Luther King Jr. holiday weekend. We’re set to kick off what could be on another eventful week on Wall Street. Starting the day, we have the U.S. stock futures rising higher as the U.S starts its first trading day of the week. The major indexes were broadly higher on Tuesday morning ahead of Janet Yellen’s testimony before a Senate committee. The bullishness came as many expect her to be in favor of higher spending on coronavirus relief. U.S. futures and Asian stocks rising are “a byproduct of the bullish sentiment seen in the market,” said Jingyi Pan, a market strategist at IG Asia Pte.
U.S. stock futures are edging higher along with the Asian and European markets today. Certainly, the strong GDP growth in China could be one of the reasons. Positive sentiments ahead of President-elect Joe Biden’s inauguration on Wednesday could also have boosted U.S. stock futures. This came as the stock market looks to bounce back from a rough week. The major future indexes are all trading in the positive territory. The Dow, S&P 500, and Nasdaq 100 futures were all in positive territory, moving 0.65%, 0.77%, and 0.98% higher respectively as of 6.43 a.m. ET.
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President’s Inauguration On Wednesday
Inauguration week is finally here. President-elect Joe Biden is slated to sign a dozen executive orders on his first day in office. Amongst them, canceling the $9 billion Keystone XL pipeline project will be his top priority. The words “Rescind Keystone XL pipeline permit” appear on a list of executive actions likely scheduled for the first day of Biden’s presidency, according to an earlier report by the Canadian Broadcasting Corp (CBC).
Given the ongoing situation with the coronavirus pandemic. Most of the events are set to take place virtually, though Biden will be sworn in on the West Front of the U.S. Capitol in person. Apart from most events taking place virtually, it also comes with heightened security relative to Inauguration Day ceremonies in the past. This came after the deadly riots at the Capitol on January 6 and the higher risk of violence as a result.
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Biden’s $1.9 Trillion Rescue Plan Under Spotlight
Last week, Biden unveiled a $1.9 trillion coronavirus rescue plan. It seeks to offer stimulus payments of $1,400 to most Americans. The stimulus plan aims to increase enhanced federal unemployment benefits by $100 to $400 per week and extend these through the end of September. Also, the stimulus bill seeks to provide $350 billion in aid to state and local governments, which had been excluded from Congress’s latest package. Whether this package could really speed up the economic recovery will be a matter of interest to many.
“We will finish the job of getting a total of $2,000 in cash relief to people who need it the most,” Biden said at an event in Delaware on Thursday evening. “The $600 already appropriated is simply not enough.”
While many are optimistic about the U.S. stimulus package, the plan isn’t exactly a done deal at the moment. The proposal may still change under congressional opposition. Perhaps, there may be tax hikes that could hurt stocks of certain sectors.
Oil Price Continues To Climb Higher
Oil prices moved higher on Tuesday on optimism that government stimulus globally will support economic recovery. The demand for oil appears to be outweighing the worries that additional COVID-19 pandemic lockdowns could reduce the usage of fuel. Brent crude futures gained 56 cents to $55.25 a barrel and the U.S. WTI crude was at $52.48 a barrel, up 12 cents a barrel as of 4.15 a.m. ET.
Investors are optimistic about the oil demand in China, the world’s top crude oil importer. Fresh off the output data released on Monday, we saw that its refinery output rose 3% to a new record in 2020. Here’s what happened. During the onset of the pandemic, China has been taking advantage of the low oil price. The country has been loading up oil at low prices. For most of 2020, you could say the strong demand in China single-handedly supported the oil market. That was when demand in Europe and the U.S. plummeted in the face of the pandemic.
This week’s key earnings will come from Netflix (NASDAQ: NFLX) today after the market’s closing bells. The streaming giant, while still a leader, has faced increasing pressure from competitors such as Disney (NYSE: DIS) and others. While you could argue that the competitive pressures may be overblown, the slowing growth in subscribers is one thing to tread carefully. Don’t get me wrong though, that’s not to say the company is not growing well. But rather its growth rate during the pandemic was likely not sustainable going forward.
“Despite increasing competition, Netflix continues to capture a significant share of content consumption dollars,” Piper Sandler analyst Yung Kim, who rates Netflix shares as Outperform, said in a note Friday. “Additionally, with COVID-19 fears pushing consumers away from travel and out-of-home entertainment, we look for Netflix to continue as a beneficiary of this altered behavior.”
Also, several major banks will be reporting earnings this week. These include Goldman Sachs (NYSE: GS), Bank Of America Corp. (NYSE: BA), Bank Of New York Mellon (NYSE: BK), and Morgan Stanley (NYSE: MS). There are also other notable names reporting earnings including Procter & Gamble Co. (NYSE: PG), Intel (NASDAQ: INTC), Costco (NASDAQ: COST), and Intuitive Surgical (NASDAQ: ISRG). So, whether it is the President’s inauguration, details of stimulus bills, or earnings, there’s a lot to digest in this shortened week.