Economy

Big Biden stimulus no balm for United States stocks, Dow loses 0

Big Biden stimulus no balm for United States stocks, Dow loses 0”

As the US markets opened higher with both Dow and S&P 500 hitting new life-highs - backed by talks of another stimulus announcement by US President-elect Joe Biden late on Thursday, market players here expect a strong opening on Dalal Street too on Friday.

JPMorgan fell 1.7% following a seven-day winning streak that had pushed the stock about 12% higher.

The Dow Jones Industrial Average lost 177 points, or 0.6%, to 30814.

Energy, financials and materials were the worst-performing sectors in the S&P 500.

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. USA consumers cut back on spending in December, the peak of the holiday season, as the country confronted a surge in coronavirus infections.

A big question for investors is what big stimulus for the economy from Washington would mean for interest rates.

US-listed shares of Taiwan Semiconductor Manufacturing Co Ltd rose 3.1% after it posted its best-ever quarterly profit and hiked revenue and capital spending estimates to record levels, as it forecast "multiple years of growth opportunities". Citigroup slid over 2% as it reported fourth-quarter results.

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The Labor Department's report showed the number of Americans filing for unemployment benefits increased more than expected to 965,000 last week from 787,000, underscoring the impact of a resurgence in COVID-19 infections.

Investors will also get an indication of how confident American households are when the University of MI releases preliminary January figures for its consumer sentiment index at 10 a.m. ET. Consumer spending accounts for more than two-thirds of US economic activity.

Prices for the 10-Year Treasury regained lost ground, lowering yields to 1.11% from Thursday's 1.13%.

Exxon shares fell after a report said that the U.S. Securities and Exchange Commission launched an investigation of the oil major, following a whistleblower's complaint that it overvalued a key asset in the prolific Permian shale oil basin. TCS, Reliance and L&T contributed the most to the index's gains, while selling in Infosys, Axis Bank and HCL Tech limited the rally to some extent.

"Markets remain cautious. there is a little bit of a fear of "sell on the news" that when (stimulus) is actually introduced, it won't be as large as some people like or it's possible that market will start to look at how it's going to be paid for", said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

Trading in Asia ended on a mixed note.



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