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Dow Cuts Gains as Tech Gets Reality Check Ahead of Biden Stimulus Speech

Published 01/14/2021, 04:00 PM
Updated 01/14/2021, 04:30 PM
© Reuters

© Reuters

By Yasin Ebrahim

Investing.com – The Dow closed lower after rising to intraday highs Thursday as losses in technology stocks offset gains in value stocks ahead expectations that President-elect Joe Biden will unveil a more than $1 trillion fiscal package to boost the economy.

The Dow Jones Industrial Average fell 0.36%, or 68 points, after hitting an intraday record of 31,223.78. The S&P 500 was down 0.31%, while the Nasdaq Composite slipped 0.12%.

Biden's fiscal package, expected to be unveiled around 7:15pm EST, will likely include proposals to boost direct payments to Americans, state and local aid, and funding the distribution of vaccines.

Investor focus will likely center on the size of the package and any updates on potential tax hikes to partially offset a $1.5 trillion infrastructure and healthcare package expected to be unveiled in the latter half of 2021, Morgan Stanley (NYSE:MS) said.

"The market will be very attentive to the overall size of the proposed package as well as the extent of potential tax hikes. We believe a headline stimulus number substantially above $1.5 trillion would come as a surprise," the bank said.

In another boost to stimulus optimism, Federal Reserve Chairman Jerome Powell reiterated the central bank would continue to keep the monetary spigot wide open as the risk of runaway inflation in the post-pandemic era is unlikely.

“The real question is, how large is that effect [post-pandemic rise in prices] is going to be and will it be persistent … clearly a one time increase in prices is very unlikely to meet persistently high inflation,” Powell said Thursday during a virtual event sponsored by Princeton's Bendheim Center for Finance.

Powell's remarks come just a day after vice chairman Richard Clarida said the fed won't raise rates until inflation reaches 2%.

The latest weekly jobs report highlighted the need for further support as jobless claims surged 181,000 to a more than four-month high of 965,000, well above economists forecast of 795,000.

Value stocks – those linked with the performance of the economy – led the upside in the broader market, with energy, industrials and financials in the ascendency.

Financials will come under deeper the spotlight on Friday as a trio of Wall Street banks kick off the quarterly earnings season in earnest.

JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) report quarterly earnings on Friday. Banks have rallied in the run up to their quarterly reports as investors anticipate strength in trading divisions, improving trends in loans will drive up performance.

The potential restart of dividend payments as well as the size of share buybacks will also be closely watched. 

Last month, the Fed lifted restrictions following a stress tests that found banks were sufficiently capitalized to withstand a negative economic shock.

Ahead of the slew of bank earnings, Delta Air Lines (NYSE:DAL) rose 2% as upbeat guidance offset mixed  quarterly performance.

In tech, weakness in the Fab 5 offset strength in chip stocks. 
 

Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) closed in negative.

Intel and Taiwan Semiconductor Manufacturing (NYSE:TSM) closed sharply higher, with the latter boosted by better-than-expected quarterly performance.

Intel (NASDAQ:INTC) rose 4%, as several analysts on Wall Street talked up the prospect of the beleaguered chipmaker as its set for new leadership.

In other news, Plug Power (NASDAQ:PLUG) fell 4% after JPMorgan initiated coverage on the stock at neutral, saying that the stock is “fully valued,” in the wake of its more than 100% gains since the start of the year.

 

Latest comments

just make sure you dump the TWTR rubbish
Trump asked for bigger stimulıs too, go big or go home , remember? Do not just express a negative opinion for expressing it. Make sense lol. Even Germany changed it’s fiscal policy. Why not USA? I dont have to mention debt of Japan ... no need to listen naysayers , go big or go home!
The market isn't receptive to the stimulus. Makers will ****these calls. Good Luck!!
Biden stimulus will inflate his masters pockets, i.e. Wall Street will be the main winner, while China comes close second. The money will go either to market or to buy Chinese stuff.
How is it different than right now?
Trump wanted bigger stimulus too .
size matters when it comes to stimulus packages. thanx joe.
the more people will get sick the more the virus will mutate and become more dangerous to the youngsters.
To boost the economy? Why not push in ten trillion? Can anyone do math? Does anyone understand debt? This donkey ia doing the exact same thing as trump donkey. Bankrupting our nation. Let the old stay home and the rest work before we have no country left.
you haven't seen anything yet wait to Biden is in there for 4 years then we'll talk about who is good and who is bad
I'm well aware. Trump is a ****** He's no Andrew Jackson, Lincoln or anyone else. Full of false promises and now he's walking away. Disgusting. Biden will seal the deal.
We are so screwed. If you voted fie Biden then you deserve everything thats coming your way. Some people aint that smart.
Wrong. Dem president republican senate. Check your facts truth my ********.. Lol
 Joe has committed to raising Capitol Gains from 21 to 33%. What does that mean for your investment profits Bub?
WRONG. Always been marginal
why did amazon, fb, google, & msft go down? the article just leaves it hanging. I wonder if it has to do with the banning and lawsuits?
The dems are not putting restrictions on big tech. The bear case is that tech is a totally saturated market and all the business that depend on them have gone under.However to supplement that income, congress has a massive bill to transfer government assets to cloud which only signals our politicians have been bought and paid for by big tech. Long term, I see big tech having infinite value. Short term they will lose money because provate industry is bankrupt.
The dems are not putting restrictions on big tech. The bear case is that tech is a totally saturated market and all the business that depend on them have gone under.However to supplement that income, congress has a massive bill to transfer government assets to cloud which only signals our politicians have been bought and paid for by big tech. Long term, I see big tech having infinite value. Short term they will lose money because provate industry is bankrupt.
The dems are not putting restrictions on big tech. The bear case is that tech is a totally saturated market and all the business that depend on them have gone under.However to supplement that income, congress has a massive bill to transfer government assets to cloud which only signals our politicians have been bought and paid for by big tech. Long term, I see big tech having infinite value. Short term they will lose money because provate industry is bankrupt.
money $ 675.000
time for the liberal ******scxum to get paid for getting him elected.
What exactly did you expect? They won't have to pay for it we will because we pay taxes.
today rip dollar , banana republic
Reality check is 50 basis points? What a joke of an article
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