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Top 5 Things to Watch in Markets in the Week Ahead

EconomyJan 17, 2021 07:23AM ET
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© Reuters

By Noreen Burke

Investing.com -- Joe Biden will be inaugurated as the 46th president of the United States on Wednesday with investors waiting to see how his plans for stimulus relief and tackling the pandemic will roll out. Janet Yellen's confirmation hearing as the U.S.’s first female Treasury secretary is set to take place on Tuesday. The holiday shortened week will also see earnings season get underway in earnest with dozens of S&P 500 companies reporting. The European Central Bank is to hold its latest policy meeting against a background of renewed lockdowns to contain the pandemic. Meanwhile, a raft of PMI data from the U.S., euro zone, Japan and the UK on Friday will lay bare the state of the global economy at the start of 2021. Here’s what you need to know to start your week.

  1. Biden bump?

Joe Biden will be inaugurated as the 46th U.S. president Wednesday, taking over the leadership of a country ravaged by the pandemic and facing deep socio-economic divisions.

Biden has announced a $1.9 trillion stimulus package, which includes $1,400 stimulus checks but this may prove a double-edged sword for investors, bolstering optimism over the outlook for the economic recovery while raising worries over how the U.S. will afford it.

The S&P 500 has risen in the first 100 calendar days of eight out of the last 10 presidential terms, but Biden's first 100 days may be more fraught than those of his predecessors. He needs to stimulate the economy quickly, but the narrow Democrat majority in Congress means the size and timing of the package remain uncertain.

  1. Yellen confirmation hearing

The Senate Finance Committee will hold Janet Yellen’s confirmation hearing for U.S. Treasury secretary on Tuesday, the day before President-elect Biden is sworn into office.

Yellen, who formerly served as Federal Reserve chair from 2014-2018, is expected to easily win confirmation in the Senate and is likely to be one of the first Biden cabinet picks to be confirmed.

Yellen is expected to champion Biden’s $1.9 trillion stimulus package -- deficit spending that she says is affordable given extraordinarily low interest rates.

  1. Earnings

Investors will be anxious to see whether upcoming earnings results validate expectations for a strong rebound in 2021.

U.S. stocks are at record highs, boosted largely by optimism that the vaccine rollout will allow for a recovery, while hopes of more fiscal stimulus have also underpinned gains.

Earnings reports for the last quarter of 2020 will get underway in earnest with the release of results from companies including Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), Netflix (NASDAQ:NFLX), Charles Schwab (NYSE:SCHW), Procter & Gamble (NYSE:PG), United Airlines (NASDAQ:UAL), Intel (NASDAQ:INTC) and IBM (NYSE:IBM).

Earnings for S&P 500 companies are expected to decline 9.5% in the final quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.4% projected for the first quarter, according to IBES data from Refinitiv.

  1. ECB meeting

The ECB is to hold its first meeting of 2021 on Thursday. Policymakers announced extra stimulus in December, but the economic outlook has been clouded again by the discovery of new Covid-19 strains and the relatively slow pace of the vaccination rollout.

Cause for concern? Not so, comments from Christine Lagarde suggest. The ECB chief predicts recovery as COVID subsides, seeing the glass as half-full, not half-empty. Germany's economy too is cause for optimism, shrinking by a less-than-expected 5% in 2020.

But prolonged lockdowns will hurt. Against this backdrop, markets will want the ECB to signal its commitment to using the full firepower of its 1.85 trillion-euro ($2.24 trillion) emergency bond-buying scheme - something on which policymakers appear to be split.

  1. Economic data

The first PMI data of 2021 from the U.S., euro zone, UK and Japan are set to be released on Friday and could be weaker than anticipated.

While economic rebound bets still stand, fresh restrictions and surging virus numbers are casting doubt over forecasts.

Other data to watch this week includes reports on the U.S. housing sector which has been boosted by record low mortgage interest rates. Thursday’s housing starts numbers and Friday’s existing home sales figures are expected to remain strong.

Meanwhile, fourth quarter and full year GDP data out of China on Monday could show that it was the only major world economy to have expanded in 2020.

-- Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (18)
Shiro Cat
Shiro Cat Jan 17, 2021 4:40PM ET
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as china would say, "we all pucked!"
Anywhere But Here
Anywhere But Here Jan 17, 2021 4:40PM ET
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Grow up.. 🤡
Jessica Katie
Jessica Katie Jan 17, 2021 3:51PM ET
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stock prices in the market i think is dropping but i believe is gonna rise soon... according to chat..
Jordalf Labrador
Jordalf Labrador Jan 17, 2021 2:35PM ET
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how we gonna buy more stock if the market its not doing so well.b
Jessica Katie
Jessica Katie Jan 17, 2021 2:35PM ET
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No cause for alarm jordalf. it will sure get back.
Jessica Katie
Jessica Katie Jan 17, 2021 2:35PM ET
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No cause for alarm jordalf. it will sure get back.
GJ DJT
GJDJT Jan 17, 2021 11:31AM ET
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Just issue platinum mint with face value of 1 trillion dollars. Worry about inflation later.
Steven Collar
Steven Collar Jan 17, 2021 11:15AM ET
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Question: Do we need to consider even the remote possibility Biden never becomes president?
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Mike Hernandez
Mike Hernandez Jan 17, 2021 11:15AM ET
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and who going to be the president ? please don't tell Donal trump !
Steven Collar
Steven Collar Jan 17, 2021 11:15AM ET
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Trading is about considering the possibility, not necessarily our opinions or desires. I prefer to be prepared for whatever the outcome.
Steven Collar
Steven Collar Jan 17, 2021 11:15AM ET
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Trading is about considering the possibility, not necessarily our opinions or desires. I prefer to be prepared for whatever the outcome.
Geno Geno
poorguy696969420 Jan 17, 2021 11:15AM ET
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i dont think it would be smart to base a position on this chance. better off playing the lottery
Al Stevens
Al Stevens Jan 17, 2021 11:15AM ET
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Are you in Lala land Stevie?
New Jazenevd
New Jazenevd Jan 17, 2021 10:53AM ET
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Easy bumping time is over. Strong market time is over too. New money will be created fast just to keep market afloat.
Oskars Reinfelds
Oskars Reinfelds Jan 17, 2021 10:43AM ET
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eurusd?
alkesh kumar
alkesh kumar Jan 17, 2021 10:43AM ET
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it's going to be toughest week for World stock market in last three months ...expected to fall like avalanche in next few sessions...Market will correct untill come to real numbers...World economy is in Contraction..and stock market in last two months grown like bubble ..time to burst the same...
Dni Restt
Dni Restt Jan 17, 2021 10:38AM ET
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any help next week gold will bullish or betisg next week?
Dni Restt
Dni Restt Jan 17, 2021 10:37AM ET
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any help next week gold will bullish or betisg next week?
New Jazenevd
New Jazenevd Jan 17, 2021 10:37AM ET
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Bullish over next month.
David Heiser
David Heiser Jan 17, 2021 10:31AM ET
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Biden bump? Markets have shown a biden drop since stim announcement.
Al Stevens
Al Stevens Jan 17, 2021 10:31AM ET
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I sold bc of more possible Trump supporters' treasonous acts over the extended weekend. No reason to expose oneself.
Kaveh Sun
Kaveh Sun Jan 17, 2021 10:21AM ET
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China Biden will make china great. The market tank the last 2 days after Biden announce his stimmy because Perhaps he borrows money from China for his stimmy.
GJ DJT
GJDJT Jan 17, 2021 10:21AM ET
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US does not need to borrow money, just issue a platinum mint.
James Pattison
James Pattison Jan 17, 2021 10:11AM ET
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The dollar is down 99% against the dollar over the last five years... this trend will continue... the world will abandon the dollar as reserve currency... all by design
apc apc
apc apc Jan 17, 2021 10:11AM ET
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true. but all bad
James Pattison
James Pattison Jan 17, 2021 10:11AM ET
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Dollar down 99% vs bitcoin
YehHanWen hansen
YehHanWen hansen Jan 17, 2021 10:11AM ET
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DJI PEAKED 31223 2days ago, and should keep dipping lower next 60 days.
James Pattison
James Pattison Jan 17, 2021 10:11AM ET
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No... biden and democrats are party of the rich... and with inflation stock prices will appreciate as the dollar loses value against everything... correction coming... but fed stimulus and QE forever
James Pattison
James Pattison Jan 17, 2021 10:10AM ET
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Its not democrat vs republican... look wt the amount of millionaires in congress... all future policies will be to pay back the richest for funding biden... and make the poor even more poor to be dependant on voting democrat forever...
apc apc
apc apc Jan 17, 2021 10:10AM ET
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socialism, communism is in full swing
apc apc
apc apc Jan 17, 2021 10:10AM ET
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true. socialism and communisim well advanced
Horde NotTrade
Horde NotTrade Jan 17, 2021 10:06AM ET
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Zio media gonna try and shill for Biden and Yellen.
Ridha B younes
Ridha B younes Jan 17, 2021 8:00AM ET
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Any Europe commission announcements that can impact gold up .
Ridha B younes
Ridha B younes Jan 17, 2021 8:00AM ET
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just asking
Ridha B younes
Ridha B younes Jan 17, 2021 8:00AM ET
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bearish ?Yes/no . ?
Xolani Kunene
Xolani Kunene Jan 17, 2021 7:45AM ET
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they will be more buys than sells this week
Alexandros Masoutis
Alexandros Masoutis Jan 17, 2021 7:45AM ET
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How do you know this
 
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