Wall St has record highs on stimulus hopes

Daniel Fowler
January 23, 2021

The S&P 500 and the Nasdaq pared some losses after the opening bell as data showed US manufacturing activity surprisingly surged to its highest level in more than 13-1/2-years in early January amid strong growth in new orders.

France's CAC 40 gained 0.4 per cent in early trading to 5,648.29, while Germany's DAX rose 0.6 per cent to 14,003.82. The FTSE 100 added 0.1% in London. U.S. shares were set to drift higher with Dow futures up almost 0.1 per cent at 31,116.5.

S&P 500 rose less than 0.1% or 1 point to 3,853 points, after hitting a day high of 3,861 and a low of 3,846 points.

The Shanghai Composite Index lost 0.6% to 3,601.41 while the Nikkei 225 in Tokyo sank 0.3% to 28,682.66.

Housing starts in the US rose 5.8% in December to a 1.67 million annualized rate, marking the fourth-straight month of gains and the best pace since late 2006.

The Russell 2000 index of smaller companies added 27.34 points, or 1.3%, to 2,168.76.

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But other data showed the housing and manufacturing sectors as areas of strength to help buttress the economy. Imports declined 11.6 per cent, marking the 20 straight month of declines. Meanwhile, prospects of greater fiscal aid under new President Joe Biden to tackle the economic damage from the COVID-19 pandemic and better strategies under Biden for vaccinating Americans at a more rapid clip helped to prop up the markets. The Bank of Japan kept its easy monetary policy at its policy board meeting, as expected.

Biden took a flurry of executive actions in his first hours as president.

Markets have been mostly rallying recently on hopes that COVID-19 vaccines will lead to a powerful economic recovery later this year as daily life gets closer to normal. Analysts said a lot of that optimism may have already been built into the stock's price. Hopes are also high that Washington will deliver another dose of stimulus for the economy now that the White House and both houses of Congress are under single control of the Democrats. The bump for stocks between Election Day and Biden's inauguration was bigger than Trump's bump between his election and inauguration.

The Dow Jones Industrial Average fell 38 points, or 0.12%, to 31,150, the S&P 500 slipped 0.06% and the Nasdaq was up 0.35%.

Analysts have been expressing concerns about pricey stock values heading into the latest round of corporate earnings, but they look more reasonable amid the backdrop of historically low interest rates, said Chief Investment Officer, Americas, at UBS Global Wealth Management Solita Marcelli. A vaccine rollout has not begun in Japan. Brent crude, the worldwide standard, fell 37 cents to USD55.71 a barrel. Manufacturers' purchasing data was also disheartening, even lowering the value of the pound by almost 1% against the United States dollar. The euro cost USD1.2119, down from USD1.2134.

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