US stocks hit new highs as investors bet on Joe Biden and global recovery

The Dow has gained about 57% in the four years since Donald Trump assumed office on January 20, 2017, which compares with a 72% jump in the first term of the Obama administration. Picture: AP Photo/Jenny Kane, File

The S&P 500 and the Nasdaq hit all-time highs as Joe Biden took charge as US president, as investors bet that his near-$2bn (€1.65trn) stimulus and the vaccine roll-out would mean better times ahead for the US and global economies. 

President Biden will waste little time turning the page on the Trump era, advisers said, signing a raft of 15 executive actions on issues ranging from the Covid-19 pandemic to the economy to climate change.

Streaming service Netflix was also a big winner, adding an extraordinary $30bn to its value in a few minutes of trade.   

US stocks were "in celebratory mood" on inauguration day, also helped by Netflix, said IG's Chris Beauchamp.        

“It’s all about the inauguration, focusing first on Biden being placed into the office and then it’s going to be about earnings,” said Robert Pavlik, senior portfolio manager at Dakota Wealth. 

The Dow has gained about 57% in the four years since Donald Trump assumed office on January 20, 2017, which compares with a 72% jump in the first term of the Obama administration. 

Bets on a bigger pandemic relief plan and higher infrastructure spending under the Biden administration, and a Democrat-controlled Congress have been pivotal in driving major US stock indexes to all-time peaks this month.

President Biden’s first year in office could go down in history as a record-breaker on the job-creation front, with an explosion in hiring expected as the coronavirus vaccine rollout, analysts said. But only slightly more than half of the 22 million jobs lost in the US in the pandemic were regained by the end of last year. The second phase of his plan is expected to boost job creation through investments in infrastructure, clean energy projects, and education. 

Janet Yellen, the former Federal Reserve chair and President Biden’s nominee for Treasury Secretary, urged US lawmakers this week to act aggressively. “Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later,” Ms Yellen said. 

In the latest session, US technology, communication services, and some consumer companies were among the biggest gainers. Netflix shares surged after saying it will no longer need to borrow billions of dollars to finance its TV shows and movies. Its shares surged 14% to add more than $30bn to its market capitalisation, helping boost the broader tech-heavy Nasdaq 100 index. Netflix is now valued at close to $221.7bn. 

Wrapping up quarterly reports from major US lenders, Morgan Stanley rose after its quarterly profit blew past estimates. Procter & Gamble raised its full-year sales forecast but its shares slipped as it warned that the pace of sales might slow as vaccines roll out. 

Here, Davy chief economist Conall Mac Coille raised the broker's economic forecasts for the Irish economy to 4.8% this year, but recovery will be slowed by the new restrictions. 

Unemployment will therefore stay at an elevated of 12% by the end of the year, even as the Government's budget deficit narrows to €18bn this year and to €12bn in 2022, according to Davy. 

-Reuters and Irish Examiner