Before The Bell
This week has seen a down stock market session on Monday, a mixed equity showing on Tuesday, and a moderately better outcome yesterday. Numerous currents will affect today’s markets.
Clearly the headline event yesterday was the voting of articles of impeachment against the outgoing President on charges of incitement of insurrection at the U.S. Capitol. This was the first time that a President had been impeached twice. Now, a trial will held in the Senate where a two-thirds vote to convict is required, and likely not concluded before the end of the 4-year term.
Moments ago, the U.S. Labor Department released the jobless claims tally for the past seven days. Unemployment filings rose by 181,000 in the latest week, to an unsettling 965,000. (Estimates had been for a slight uptick to 800,000.)That number, which had fallen for much of the summer and autumn, as COVID-19 cases had eased off, has been on a higher trajectory recently, as infections and deaths have turned sharply upward, even as vaccine distributions have increased. Continuing (or longer-term) claims also increased, breaking a downward trend in recent months.
Nevertheless, the futures are still modestly higher on the Dow and the S&P, but little changed on the NASDAQ, as investors are banking on the likelihood that President-Elect Biden will achieve aggressive fiscal stimulus measures. He is to speak later today.
Meanwhile, yesterday afternoon, the Fed issued its Beige Book summary of economic conditions across the nation. The general consensus was that the economy was slackening off after a mid-2020 surge in output. Specifically, a third of the central bank's 12 Districts reported flat or declining business activity during November and December, which coincided with the pandemic's increasing proliferation. In other economic news, the Consumer Price Index rose 0.4% in December, matching the consensus, while mortgage applications also increased last week.
The stock market is largely unfazed, as stocks had a slightly higher tilt yesterday. The reasoning appears to be that the market is focusing on President-Elect Biden's plan to increase distribution of vaccines and, as noted, his efforts to get a larger stimulus package through Congress. Meanwhile, in trading yesterday shares of Intel (INTC) jumped almost $4 on news there will be a change in leadership. Also, shares of Microsoft (MSFT) ticked higher, as did some other high-tech issues.
It is against this uncertain backdrop that the market appears set to commence trading to the upside when traders get going this morning.
– Harvey S. Katz, CFA
At the time of this article's writing the author holds positions in INTC
