The stock market is on track to post its biggest weekly gain in three months after posting its worst weekly performance since late October last week as Wall Street eyes an early morning stimulus development that should help Democrats push through a massive new stimulus package by mid-March.
Shortly after the market open, the Dow Jones industrial average ticked up 146 points, or 0.5%, pushing the index right below a late-January peak, while the S&P 500, which closed at a record high Thursday, also climbed 0.5%, and the tech-heavy Nasdaq edged up 0.35.
Heading up gains in the S&P, cosmetic giants Estee Lauder, whose shares are up 6%, continued the fourth-quarter earnings season blowout, posting a surprise 5% increase in sales, which hit nearly $4.9 billion last quarter, and better-than-expected profits of $873 million.
Shares of Ford are up 4% after the firm reported earnings of 34 cents per share on Thursday, far surpassing analyst estimates averaging a loss of 7 cents per share; the legacy carmaker also said it would invest $11.5 billion in electric-vehicle technology over the next few years.
Shares of Snapchat’s parent, on the other hand, are down nearly 6% after Snap’s earnings beat on all key metrics, including better-than-expected revenues of $911 million and daily active users of 265 million, but failed to impress Wall Street with first-quarter revenue projections of about $730 million.
Meme stocks GameStop and AMC are up 5% and 1%, respectively, after massive losses over the past week; after more than a week of restricting trades in such stocks to just a few shares, online brokerage Robinhood finally lifted all limits imposed on meme stocks Friday morning.
Meanwhile, the United States added just 49,000 jobs in January, according to data released by the Labor Department Friday—less than half the 100,000 added jobs economists were expecting; a shrinking labor force helped push the unemployment rate down to 6.3%.
“The weakness portrayed in today’s labor report opens the door for the Biden administration to push forward with a higher spending package and provide relief for many Americans and businesses that continue to struggle with the pandemic,” Charlie Ripley, a senior investment strategist for Allianz Investment Management, said Friday. “Despite the soft report, market reaction was favorable as the odds for a bigger stimulus package have only been increased.”
After an all-night session, the Senate narrowly approved a budget resolution Friday morning that will allow Democrats to move forward on President Joe Biden’s lofty $1.9 trillion stimulus proposal without any Republican backing. It’s likely the package will need to be trimmed down to satisfy some of the more conservative Democrats, but experts, including Vital Knowledge Media Founder Adam Crisafulli, still estimate the resulting bill could total as much as $1.7 trillion and hit President Biden’s desk by early March.
“The stock market is as stretched as ever. Excess in company valuations are obvious, but now we are seeing extreme levels of margin borrowing and melt-ups in highly shorted or penny stocks. These are all signs of a market top,” James McDonald, the CEO of Los Angeles-based Hercules Investments said Friday. “There are two big risks to the stock market currently: the spread of stronger and more contagious Covid-19 mutations and the possibility of waning government stimulus if the economy returns to normal faster-than-expected.”
What To Watch For
Major earnings to watch next week include Lyft, Twitter and Cisco Tuesday evening, followed by GM, Uber and MGM on Wednesday.
10.1 Million Americans Are Still Unemployed As Rate Ticks Down To 6.3% (Forbes)
Senate Approves Budget Resolution Paving The Way For Biden’s $1.9 Trillion Stimulus Plan (Forbes)
Another 779,000 Americans Filed For Unemployment Last Week (Forbes)
Meme Stocks Crash Again: GameStop Losses Hit $20 Billion In One Week As Reddit-Fueled Mania Subsides (Forbes)