U.S. stocks were set to rally Tuesday, a day ahead of the inauguration of President-elect Joe Biden and as fourth-quarter earnings season kicked into higher gear, featuring results from the likes of Bank of America, Goldman Sachs Group and Netflix.
Investors were also awaiting testimony from Janet Yellen, who is scheduled to speak before the Senate Finance Committee at 10 a.m. Eastern at the former Fed chair’s confirmation hearing on her nomination to serve as Treasury secretary in the Biden administration.
Markets were closed on Monday in observance of the Martin Luther King Jr. holiday.
How are stock benchmarks performing?
Futures for the Dow Jones Industrial Average
rose 205 points to reach 30,925, a rise of 0.7%.
- S&P 500 index futures were up 29.20 points, or 0.8%, at 3,791.50.
- Nasdaq-100 futures climbed 128 points, or 1%, to reach 12,930.25.
On Friday, stocks closed lower for the day and week, with the Dow
posting a weekly loss of 0.9%, the S&P 500
and Nasdaq Composite
both fell 1.5% on the week. However, the small-capitalization Russell 2000 index
posted a weekly gain of 1.5%.
What’s driving the market?
After a three-day weekend, futures were pointing solidly higher, with the bullish optimism to start the week being attributed, at least partly, to the prospects of a new presidential regime that is perceived as supportive to further gains for stocks in early days of 2021.
Yellen — Biden’s nominee to replace Treasury Secretary Steven Mnuchin — was scheduled to say that more fiscal aid is needed to avoid a protracted economic recession underpinned by the COVID-19 pandemic.
“Economists don’t always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later,” Yellen is expected to say in front of lawmakers in her confirmation testimony.
“But right now, with interest rates at historic lows, the smartest thing we can do is act big,” Yellen writes.
Her remarks come after Biden on Thursday night rolled out an ambitious $1.9 trillion coronavirus relief package, calling for another round of direct stimulus payments, extended and enhanced jobless benefits, that is anticipated to face resistance from Republicans in Washington concerned about growing deficits to combat the deadly viral outbreak.
“Yellen, the future Treasury Secretary, is tipped to tell politicians the government needs to ‘act big’ as a way to support the economy,” wrote David Madden, market analyst at CMC Markets UK, in a daily research note.
Meanwhile, the virus continues to spread rapidly. The U.S. added at least 142,588 new cases on Monday according to a New York Times tracker, and counted at least 1,440 deaths, although the numbers are likely underreported as staffing is reduced at weekends and on holidays.
Market participants were also digesting quarterly results, with Bank of America
reporting that it planned on buying back some $2.9 billion in stock through March after its results topped analyst consensus earnings’ estimates but lagged in revenue.
The report from B. of A. comes after a mixed bag of quarterly results on Friday, when JPMorgan Chase & Co.
and Wells Fargo
reported their earnings updates.