Investor sentiment turned optimistic yesterday, with the markets hitting all-time highs off the hope that President Joe Biden will deliver a $1.9 trillion stimulus package to help boost the economy. A strong start to earnings season also improved feelings on Wall Street.
U.S. stock futures close at record highs
Major indexes traded positively yesterday and each average notched a fresh record high.
The Dow Jones Industrial Average rose 0.8% and closed at 31,188.38 points. The S&P 500 advanced 1.4%, closing at 3,851.85 and the Nasdaq Composite jumped almost 2% to 13,457.25. Notably, all three indexes touched their intraday highs during yesterday’s session.
Earnings season kicks off with a bang
Netflix (NASDAQ: NFLX) was the big winner of the day. The streaming giant witnessed its share price soar 17% after reporting strong subscriber growth, as well as the possibility of share buybacks in the future. The platform smashed estimates for global paid subscriber additions, recording 8.5 million versus the 6.47 million Wall Street predicted. The news that surprised shareholders was the company’s announcement that it expects to be cash-flow positive after 2021 and will no longer need outside financing to help with content development. Check out our thoughts on Netflix’s earnings here.
Elsewhere on Wall Street, huge financial institutions reported strong earnings, including Morgan Stanley. The investment bank reported both earnings and revenue that topped analyst estimates on solid wealth management results. Meanwhile, consumer goods company Procter & Gamble managed to raise its fiscal 2021 forecast and stated that revenue over the previous quarter increased on higher pandemic demand for cleaning products during the health emergency.
Stimulus and vaccine hopes
Investors are hopeful that the Democratic party’s $1.9 trillion coronavirus relief plan will stimulate the U.S economy and aid earnings growth. Janet Yellen, the President’s nominee for Treasury Secretary, confirmed her endorsement for higher public spending and encouraged lawmakers to “act big.” The proposal to give $1,400 to most U.S. citizens and further unemployment benefits has been widely accepted as many Americans are struggling to pay bills.
Biden’s plan to combat the virus with an aggressive vaccine rollout is a key measure to get the economy back on track. Biden is going to use the National Guard and the Federal Emergency Management Agency to construct huge vaccination sites across America. Biden also explained his plans to accelerate the availability of vaccines at local pharmacies, promising to administer 100 million doses in his first 100 days.
Wall Street’s future looks bright
The orderly, peaceful transition of power, coupled with a definite plan on when citizens should expect a vaccine has led to tremendous market gains that should continue, should Biden follow through on his promises. Traders and corporate America are finally seeing some much-needed light at the end of the coronavirus tunnel.
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Content Writer at MyWallSt
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.