The major stock-market indexes are floating near all-time highs Tuesday as cyclical stocks battered by the pandemic continue to outperform the broader market, with energy firms a particular bright spot as investors eye vaccination progress and fiscal stimulus despite millions of Americans facing power outages.
Shortly after the market open, the Dow Jones industrial average jumped 151 points, or 0.5%, climbing past an all-time closing high, while the S&P 500, which closed at a record Monday, jumped 0.4%, and the tech-heavy Nasdaq gained 0.5%.
Despite a crippling snowstorm leaving millions in Texas and neighboring states without power, epicenter stocks including those in energy, chemicals and renewables are heading up gains in the S&P, with Occidental Petroleum, Marathon Oil and Freeport McMoran up 6%, 5% and 4%, respectively.
Production slowdowns forced by the Texas region’s adverse weather continue to help push oil prices higher, with the price of West Texas Intermediate jumping an additional 0.5% Tuesday morning.
On the earnings front, CVS shares are up 1% after the retail pharmacy giant beat Wall Street expectations with fourth-quarter sales of nearly $70 billion–boosted by vaccination despite retail sales that continue to underperform their pre-pandemic levels.
Despite 40% revenue growth that pushed sales to $322 million in the first quarter, shares of recently public data firm Palantir are slipping 7% on the heels of an earnings report that showed the Peter Thiel-backed firm lost $148 million in the fourth quarter.
Global stocks also climbed higher Tuesday: Japan’s Nikkei 225 ended the day up 1.3%, while the Shanghai Composite jumped 1.4%, and the United Kingdom’s FTSE 100 is ticking up 0.1%.
“Epicenter names did very well Monday and that strength is continuing for a second day thanks to vaccine optimism,” Vital Knowledge Media Founder Adam Crisafulli said Tuesday morning noting that the three pillars driving stock-market growth–vaccines, stimulus and earnings–are all still in focus. “Vaccine optimism continues to rise as anticipation builds for a rapid expansion in U.S. inoculation numbers over the next 2 to 3 months, and the U.S. Covid backdrop could look dramatically different (i.e. much improved) by the end of April. With Trump’s impeachment trial out of the way, the focus in Washington will shift exclusively to stimulus as Democrats race to get a roughly $1.7 trillion bill on [President Joe] Biden’s desk by the middle of March.”
MicroStrategy, one of the biggest institutional owners of bitcoin, announced Tuesday morning that it will raise $600 million in debt to acquire additional bitcoin as the price of the world’s largest cryptocurrency surges to new highs near the $50,000 threshold.
Bank of America analysts on Friday reiterated bullish expectations for the energy sector thanks to President Biden’s upcoming climate-focused infrastructure plan that should help bolster growth in “picks and shovels” industries (despite increased regulation). The heightened spending would mark a steadfast pivot from the largely tech-focused spending of late, which “could mark a significant change in market leadership,” the bank’s economists noted.
What To Watch For
On Thursday, the House Financial Services Committee will hold a hearing to discuss the recent market volatility sparked by so-called meme stocks like GameStop. Goldman Sachs says topics likely to be explored will include the gamification of retail investing, the capitalization of broker-dealers and the mechanics of short-covering. Executives of Reddit, online brokerage Robinhood and market-maker Citadel are all set to testify.
Is The Stock Market About To Crash? (Forbes)