U.S. markets and stock exchange traded funds rose Tuesday as the quarterly earnings season goes into full swing and Treasury Secretary nominee Janet Yellen called for aggressive coronavirus relief spending.
On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 1.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.5%, and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.9%.
During her confirmation hearing, Yellen argued that the U.S. can afford to spend big on another fiscal relief package as the benefits outweigh the costs of a higher debt burden, especially with borrowing costs at record lows, Reuters reports.
President-elect Joe Biden, who will be sworn into office on Wednesday, has already proposed a $1.9 trillion stimulus plan last week to ramp up growth and accelerate the distribution of the coronavirus vaccine rollout.
“Janet Yellen is saying rates are low, let’s do huge stimulus to come out of this, and recover strong and the market likes that so far,” Thomas Hayes, chairman of Great Hill Capital, told Reuters. “The overriding theme for the next 24 hours is big stimulus, big packages, big recovery going into the inauguration tomorrow.”
Meanwhile, on the earnings front, Bank of America strengthened after beating fourth-quarter profit estimates and joined JPMorgan, Citigroup, and Wells Fargo & Co in releasing cash reserves to cover losses due to the coronavirus pandemic. Goldman Sachs Group’s fourth-quarter profit more than doubled on a stellar performance at its trading and underwriting business.
“These stocks need to just take a little breather before they resume their uptrend. They’re still dramatically undervalued in intermediate to long-term,” Hayes added.
Major banks’ earnings suggest they are “seeing the economy stabilize; their worst-case scenarios haven’t been met,” Shaniel Ramjee, a multiasset fund manager at Pictet Asset Management, told the Wall Street Journal. “Even if the virus is still with us, banks are seeing an uplift in the economy.”
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