U.S. Stock Indexes Slide Into the Red as Investors Look Ahead to Biden’s Stimulus Address

By Steve Goldstein, Nicholas Jasinski, and Jacob Sonenshine

Updated Jan. 14, 2021 4:41 pm ET / Original Jan. 14, 2021 5:13 am ET

U.S. President-elect Joe Biden arrives at the Queen theater in Wilmington, Delaware on Jan. 10, 2021.

AFP via Getty Images

U.S. stock indexes gave up modest earlier gains to slide into the red in the final hour of trading on Thursday, to close slightly down on the day. Investors, economists, and political analysts were all looking ahead to an address by President-elect Joe Biden scheduled for Thursday evening, in which he is set to unveil his economic agenda and plans for further U.S. stimulus.

The Biden team’s initial proposal is reportedly in the $1 trillion to $2 trillion range. U.S. government bond yields continued to rise on Thursday. Also on Thursday, Federal Reserve Chair Jerome Powell delivered remarks reinforcing that the Fed isn’t taking its foot off the gas anytime soon.

All the market has cared about for months has been the twin tailwinds of massive fiscal and monetary policy support until the pandemic has passed, and Thursday’s pair of speeches are likely enough to keep spirits bullish on that front.

The Dow Jones Industrial Average closed down 69 points, or 0.2%, after having been up more than 150 points earlier on Thursday. The S&P 500 lost 0.4% and the Nasdaq Composite slipped 0.1%. The small-cap Russell 2000 jumped 2.1%. Cyclical and economically sensitive sectors of the market generally outperformed growth and defensive areas on Thursday.

ALSO READ

• How Long Covid-19 Infections Can Provide Immunity
• Wall Street Is Changing Its Mind on Exxon Mobil
• GameStop Stock Soars as Short Sellers Take a Hit

The gains came after several outlets reported that President-elect Joe Biden, who is due to speak in Wilmington, Del., will outline an up to $2 trillion spending proposal that will include more direct payments to American families and significant state and local funding. The yield on the 10-year U.S. Treasury rose on Thursday, to about 1.13%.

The need for more stimulus was apparent following Thursday’s jobless claims release. Some 965,000 Americans filed for first-time unemployment insurance, far more than forecasts for 812,000.

“In the markets, the bigger the proposal’s price tag, the better for equities and the U.S. dollar. There has been a paradigm shift lately in dollar dynamics, where promises of astronomical spending now boost the reserve currency as the rosier outlook for growth overshadows deficit concerns. If all the spending supercharges the economy, the Fed could reign in its generous QE [quantitative easing] program sooner,” said Marios Hadjikyriacos, investment analyst at XM.

Fed Chair Powell participated in an online conversation with Markus Brunnermeier, director of Princeton’s Bendheim Center for Finance. Topics included the central bank’s new policy framework and its crisis response. The central banker emphasized that the economic recovery still had momentum but that the pandemic remained a barrier to a full rebound. Powell also underlined that the Fed was far, far from any major shift in monetary policy.

The Nikkei 225 and Hang Seng rose 0.8% and 0.9%, respectively, and the Stoxx Europe 600 added 0.7%.

Shares of Chinese technology firms Alibaba (BABA), Baidu (BIDU), and Tencent (TCEHY) gained 3.3%, 5.1%, and 3%, respectively. The U.S. Treasury reportedly blocked an attempt by the Pentagon to force the divestiture of Chinese internet giants by American investors.

Spaceflight company Virgin Galactic (ticker: SPCE) jumped 20% after ARK Investment Management filed with the Securities and Exchange Commission to launch a space-exploration exchange-traded fund. ARK didn’t identify what companies it would hold in the fund.

Delta Air Lines (DAL) stock closed up 2.5% after the company reported revenue of $3.5 billion, missing expectations for $3.6 billion, and an adjusted loss per share of $2.53, which was larger than forecasts for a $2.50 loss.

BlackRock (BLK) finished down 4.6% after the asset management giant reported a fourth-quarter profit of $10.02, beating forecasts for $9.19, on sales of $4.5 billion, against estimates of $4.3 billion.

Intel (INTC) rose 4% after getting upgraded by at least four different firms following Wednesday’s announcement of a CEO change.

Marathon Oil (MRO) jumped 7.8% after Truist upgraded the stock to Buy from Hold.

Nordstrom (JWN) reversed an earlier loss to rise 1.2% after Telsey Advisory Group downgraded the stock to Market Perform from Outperform.

FuelCell Energy (FCEL) stock dropped 8% after getting cut to Underweight from Neutral at JPMorgan.

Beyond Meat (BYND) stock jumped 13.7% after Yum Brands’ Taco Bell said it would begin testing a plant-based protein from the company. Yum stock (YUM) rose 0.6%.