US stocks closed mostly higher as members in the House of Representatives are starting to vote on the article of impeachment against President Donald Trump.
Stocks are near record highs, but can they defend their high valuations? Perhaps not, said Nancy Tengler of Laffer Tengler Investments.
The market corrects on average every 12 months, Tengler said on the CNN Business’ digital live show Markets Now.
“We’re just kind of due,” she said.
Stocks have had a very strong run and “a pullback would be an opportunity to get access to great companies at a discount,” she added.
Tengler said that she likes the space where consumer intersects with tech, companies such as Square (SQ), Walmart (WMT), Starbucks (SBUX) and Home Depot (HD). “Roku is an interesting name for us,” she added, as well as Amazon (AMZN) and Apple (AAPL).
She has been trimming social media holdings.
“They had a nice run, we’ve taken some off the table,” she said, including Facebook (FB) and Google (GOOGL).
On the whole, 2021 will likely be another great year for the market, given the expectation for more government stimulus under the in-coming Biden administration.
“We think stimulus will lift all boats,” she said.
More dovish words from the Federal Reserve, this time from Fed Gov. Lael Brainard.
The central bank will keep interest rates near zero and continue its asset purchases for as long as needed, Brainard said at a lecture at the Canadian Association for Business Economics.
And for those concerned about spikes in inflation, there was some soothing data earlier today: Inflation was only 1.4% last year, giving the Fed ample wriggle room, especially under its new policy framework that allows a little more inflation than the old one. This should rule out any rate hikes in the near term.
“Lifting the lives of working people is at the heart of economic policymaking,” she added.
But the Fed can’t go it alone, as Fed Chairman Jerome Powell has said many times. Brainard echoed the sentiment, too.
“If we look ahead, effective vaccines and additional fiscal support are important positive developments, but the near-term outlook is challenging due to the resurgence of the pandemic, and the economy remains far from our goals,” she said.
The US deficit has ballooned during the pandemic and the incoming Biden administration is expected to add yet more debt to fund stimulus to get the economy back on track.
And while that’s worrying, it’s what’s needed right now.
The US economy isn’t out of the woods when it comes to its recovery, she told Alison Kosik on the CNN Business’ digital live show Markets Now, but we’re at a critical moment: The vaccines are a light at the end of the tunnel, yet the jobless crisis is showing no sign of letting up.
For the Biden administration, a targeted approach to additional stimulus is the right way to go, MacGuineas said. That means fighting the virus and giving support to people who are dealing with economic hardship, as well as supporting viable businesses.
She added that “there’s a real need for infrastructure spending, and interest rates are low, which affords us a lot more space than we might other have had.”
Social media platforms have taken action since last week’s violent riot in Washington, deplatforming President Donald Trump and various groups. For critics of these companies, this action is welcome but also a long time coming.
“It’s clearly welcome. this is an essential action at a unique moment in time,” said Roger McNamee, co-founder of private equity firm Elevation Partners, on the CNN Business’ digital live show Markets Now.
“The notion that Facebook didn’t play a uniquely bad role in it is laughable,” he said.
Social media platforms have been playing with fire for years, McNamee added, saying hate speech was a lubricant for platforms like Facebook (FB).
The focus on shareholder value by some companies has been fantastic for investor returns, but “if shareholder value is the only thing that matters, it excuses a lot of terrible things,” he added.
The tech industry needs a reform, McNamee said.
The red hot initial public offering market is picking up in 2021 right where it left off at the end of last year. Buzzy online lending startup Affirm, which lets people buy now and pay later for goods, soared about 90% in its market debut Wednesday.
Affirm (AFRM), whose CEO and founder is PayPal (PYPL) co-founder Max Levchin, sold $1.2 billion in the stock offering and is now worth more than $22.5 billion. The surge for Affirm follows the big jumps for Airbnb (ABNB), DoorDash (DASH) and Palantir (PLTR) when they began trading late last year.
The company, like many startups, is growing rapidly. Sales in its latest fiscal year nearly doubled to more than $500 million. But like most unicorns, Affirm is not yet profitable.
Still, the successful IPO is the latest feather in the caps of the so-called PayPal mafia, former executives at the digital payments giant who went on to even bigger things in the world of tech and finance.
That list includes venture capitalist Peter Thiel, a Palantir co-founder and one of the few high-profile Republican/Trump donors in Silicon Valley, LinkedIn founder Reid Hoffman, Yelp (YELP) CEO and co-founder Jeremy Stoppelman and YouTube co-founders Steve Chen, Chad Hurley and Jawed Karim.
And oh yeah, some guy named Elon Musk, the CEO of Tesla (TSLA) and SpaceX, was part of that group, too.
Tomorrow is jobless claims day, and the data is unlikely to show signs of improvement.
Economists polled by Refinitiv expect that another 780,000 Americans filed claims for unemployment benefits last week. That would only be 7,000 fewer than in the prior week. Ugh.
Weekly first-time jobless claims haven’t shown improvement for weeks. After dropping below 1 million in late August, they have stayed in a tight range for an economy that’s meant to be recovering.
Worse still, these numbers don’t include claims from workers such as the self-employed who filed for Pandemic Unemployment Assistance, which are counted separately.
There’s no letting up for America’s jobs crisis. The last stimulus package has extended the pandemic-specific benefits introduced in the CARES Act and added a weekly $300 to regular aid. But more will likely need to be done once President-elect Joe Biden takes office next week.
Tech stocks are among the winners today, and the Nasdaq Composite is up 0.4% at midday.
But it doesn’t look that cheery across the other indexes. The S&P 500 is up a modest 0.1% around noon, while the Dow is down 0.1%, or 16 points.
Intel (INTC), which said this morning that its CEO Bob Swan is being replaced, is the best performer in the S&P.
An hour into the trading day, stocks are modestly higher across the board as the focus remains on Washington.
The Dow is up 0.1%, or 24 points, and the S&P 500 is also trading 0.1% higher. The Nasdaq Composite is up 0.3%.
While all three indexes are in record territory, they remain at arm’s length from the all-time highs they hit Friday.
Americans for Prosperity, the powerful political arm of the network founded by GOP megadonor Charles Koch, is signaling it could cut funding to some lawmakers based on their actions prior to the Jan. 6 insurrection at the US Capitol.
“Lawmakers’ actions leading up to and during last week’s insurrection will weigh heavily in our evaluation of future support,” Emily Seidel, the CEO of Americans for Prosperity, said in a statement.
Americans for Prosperity is the policy organization of Stand Together, formerly known as the Koch network.
The announcement is especially noteworthy because Koch Industries, the conglomerate run by billionaire Charles Koch, was one of the biggest backers of the 147 Republicans who objected to the Electoral College results.
During the 2020 election cycle, Koch Industries donated $931,500 to those Republicans, according to OpenSecrets.
“We will continue to look for ways to support those policymakers who reject the politics of division and work together to move our country forward,” Seidel said.
However, Americans for Prosperity is not going as far as other major companies. Bank of America, Coca-Cola, Facebook, and others have suspended political donations altogether. Amazon, Verizon, CNN owner AT&T and others promised not to give money to those 147 Republicans.
US stocks opened little changed on Wednesday as all eyes are on the impeachment proceedings in Washington.
The Dow and the S&P 500 opened flat.
The Nasdaq Composite rose 0.1%.
That said, the stock indexes remain in record territory.
Intel (INTC) shares soared about 13% following a report that CEO Bob Swan is being replaced.
CNBC said Wednesday that VMWare CEO Pat Gelsinger will take over the position February 15. VMWare’s (VMW) stock slipped 5% on the news.
The reported change comes after activist investor Dan Loeb of Third Point wrote a letter in December calling on Intel to hire an investment adviser to explore “strategic alternatives” aimed at regaining market share from competitors – particularly Taiwan Semiconductor Manufacturing Company and Samsung.
CNBC added the changes will be announced “later on Wednesday.”
Inflation data for 2020 is in, and consumer prices rose 1.4% without seasonal adjustments last year, according to the Bureau of Labor Statistics.
That’s ever so slightly above what economists expected – but it was also down sharply from the 2.3% increase in 2019. In fact, that was the smallest December-to-December price increase since 2015.
Without food and energy, inflation was 1.6% last year. The index of food prices alone rose 3.9% (remember how everything got more expensive at the grocery store?), while the energy index dropped 7% (the collapse in oil brought gas prices down, even though they rose again at the end of the year).
In December alone prices rose 0.4% on a seasonally adjusted basis, which was in line with expectations. As happens so often, most of the price increase was due to rising gas prices. Stripping out volatile food and energy components, prices rose only 0.1% in December.
The yield on the 10-year US Treasury bond is a touch lower at 1.12% today as the recent ascent in yields is taking a breather.
A quick reminder: Last year in March, the 10-year yield fell below 1% for the first time in history as investors fled to the safety of the asset. Bond yields and prices move opposite to each other, so when the price goes up, the yield goes down.
After a rocky March, yields remained tepid, and the Federal Reserve’s commitment to keep interest rates near zero to support the economy helped with that.
But since the start to the new year, yields have been on the rise, climbing above 1% for the first time last week. Until today.
Market watchers think the pause is due to investors being reminded that the Fed isn’t going to raise rates anytime soon after some sobering words from the central bank’s officials yesterday. Strong demand in an auction of fresh Treasuries Tuesday was another, they said.
Urban Outfitters (URBN) shares fell nearly 11% in premarket trading after reporting weak holiday sales late Tuesday.
Last year’s November and December total sales fell 8.4% compared to the year prior. Same-store sales slid 9%, but digital sales across all of its brands, including Anthropologie and Free People, increased double digits.
The retailer also said that Urban’s CEO Trish Donnelly will leave the unit at the end of the month with Free People’s CEO Sheila Harrington taking over the role.
Target’s holidays were quite the gift for itself, with comparable sales soaring 17% in November and December the retailer said Wednesday.
Customers also spent more in 2020 compared to the year prior, with a 12.3% increase in average receipt. Notably, its expansion of Black Friday deals to all of November with more online deals sent digital sales 102% higher.
CEO Brian Cornell said the retailer has had continues to have “strong sales trends” and announced that Target will close once again on Thanksgiving this year.
Target (TGT) shares were flat in premarket trading.
US stock futures are flat ahead of a vote in the House of Representatives on President Donald Trump’s second impeachment.
Markets closed modestly higher Tuesday, falling just short of reaching new all-time highs.
Investors are hoping for more stimulus plans to get the economy back on track, but the political turmoil in Washington could be a hurdle with the impeachment proceedings possibly worsening the partisan divide.
Visa (V) and fintech startup Plaid have terminated their $5.3 billion merger agreement after facing a legal challenge from the Department of Justice.
The proposed deal was announced a year ago, but in November the DOJ sued to block the acquisition on antitrust grounds.
In a statement announcing merger’s end Tuesday, Visa CEO Al Kelly cited “protracted and complex litigation” that would take “substantial time to fully resolve.”
The companies said the DOJ agreed to drop its lawsuit.
The insurrection at the US Capitol has sparked a reckoning in the business world.
Bank of America, Coca-Cola, Facebook (FB), Microsoft (MSFT) and other companies announced Monday they have suspended political donations. Airbnb, Amazon (AMZN), Verizon and CNN owner AT&T vowed not to give money to the 147 Republicans who tried, unsuccessfully, to overturn President-elect Joe Biden’s victory.
The steps underscore just how toxic the Trump brand has become after last week’s storming of the US Capitol. Democracy is literally under attack – and that’s not good for business.
But the real test will come when Democrats, suddenly backed by a narrow majority in the US Senate, push raising corporate tax rates and introduce new regulation.
