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

Stock MarketsJan 14, 2021 04:30PM ET
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© 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.

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

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Comments (14)
Pwr Strk
Pwr Strk Jan 14, 2021 6:54PM ET
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just make sure you dump the TWTR rubbish
YUNUS EMRE ALTUN
YUNUS EMRE ALTUN Jan 14, 2021 6:50PM ET
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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!
Christian Gustafson
Christian Gustafson Jan 14, 2021 6:49PM ET
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Biden was not elected and will not serve as POTUS.  Please stop writing these silly articles.
YUNUS EMRE ALTUN
YUNUS EMRE ALTUN Jan 14, 2021 6:49PM ET
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I guess Americans developed a new habit which is rejecting legitimate election results. Democrats started it with Russian hoax but they played game by rules at least, what happened in capitol is unacceptable , stop doing itTrump lost the election because he has been caught in a economic crisis, all economic crisis’ change ruling party . Labour couldnt win elections since 2008 in UK . Is it that hard to understand? It doesnt matter whether it is covid or notPeople always hold politicans responsible
Arthur Santos
Arthur Santos Jan 14, 2021 6:49PM ET
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TROLL
Simon Jones
Simon Jones Jan 14, 2021 6:49PM ET
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Lol, Trump didnt nothing but stole tax payers money by visiting his resorts every week and hosting events. So the real losers are the people. He didnt nothing for america,tarnished the iamge of america and you want him as the president again. Same guy who said claimed election was fraud and then asking officials to commit fraud by findjng the “Votes”. You guys are dilusional. It is true what they say, tell a lie many times people will believe its the truth!
Arthur Santos
Arthur Santos Jan 14, 2021 6:49PM ET
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Ronald Warren
Ronald Warren Jan 14, 2021 6:43PM ET
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The market isn't receptive to the stimulus. Makers will ****these calls. Good Luck!!
New Jazenevd
New Jazenevd Jan 14, 2021 5:11PM ET
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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.
Janet Chou
Janet Chou Jan 14, 2021 5:11PM ET
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How is it different than right now?
YUNUS EMRE ALTUN
YUNUS EMRE ALTUN Jan 14, 2021 5:11PM ET
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Trump wanted bigger stimulus too .
Casador Del Oso
Casador Del Oso Jan 14, 2021 4:56PM ET
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size matters when it comes to stimulus packages. thanx joe.
Viktor Koldamov
Viktor Koldamov Jan 14, 2021 4:51PM ET
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the more people will get sick the more the virus will mutate and become more dangerous to the youngsters.
Tom Daniel
Tom Daniel Jan 14, 2021 4:42PM ET
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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.
gid desimone
gid desimone Jan 14, 2021 4:42PM ET
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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
Tom Daniel
Tom Daniel Jan 14, 2021 4:42PM ET
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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.
Scot House
Scot House Jan 14, 2021 4:37PM ET
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We are so screwed. If you voted fie Biden then you deserve everything thats coming your way. Some people aint that smart.
Truth Trader
Truth Trader Jan 14, 2021 4:37PM ET
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Greatest market gains have come under democrats. Fact.
Tom Daniel
Tom Daniel Jan 14, 2021 4:37PM ET
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Wrong. Dem president republican senate. Check your facts truth... Lol
Tom Daniel
Tom Daniel Jan 14, 2021 4:37PM ET
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Truth Trader Wrong. Dem president republican senate. Check your facts truth my ********.. Lol
Tim Daly
Tim Daly Jan 14, 2021 4:37PM ET
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Truth Trader  Joe has committed to raising Capitol Gains from 21 to 33%. What does that mean for your investment profits Bub?
climate east
climate east Jan 14, 2021 4:37PM ET
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WRONG. Always been marginal
Carlos Sacasa
Carlos Sacasa Jan 14, 2021 4:35PM ET
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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?
Taylor Kaplan
Taylor Kaplan Jan 14, 2021 4:35PM ET
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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.
Taylor Kaplan
Taylor Kaplan Jan 14, 2021 4:35PM ET
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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.
Taylor Kaplan
Taylor Kaplan Jan 14, 2021 4:35PM ET
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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.
Luqman Firdaus
Luqman Firdaus Jan 14, 2021 4:29PM ET
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money $ 675.000
Nison Kay
Nison Kay Jan 14, 2021 4:29PM ET
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time for the liberal ******scxum to get paid for getting him elected.
Liam Andrade
Liam Andrade Jan 14, 2021 4:29PM ET
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What exactly did you expect? They won't have to pay for it we will because we pay taxes.
Matius Marvn
Matius Marvn Jan 14, 2021 4:27PM ET
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today rip dollar , banana republic
Matt Kay
Matt Kay Jan 14, 2021 4:27PM ET
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Reality check is 50 basis points? What a joke of an article
 
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