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US stocks are expected to start an exceptional week of moderate earnings.
Apple AAPL,
Tesla TSLA,
Facebook FB,
and Microsoft MSFT,
are all set to report profits in an action-packed week that also includes the Federal Reserve’s first Biden administration policy meeting. In fact, nearly a quarter of the S&P 500 will report results – with those companies making up 39% of the index by market value, according to FactSet data.
The COVID-19 pandemic and the deployment of vaccines across the United States remain at the center of concerns as President Joe Biden gets to work. Investors will also be watching the fourth-quarter US GDP reading closely on Thursday, with economists polled by MarketWatch expecting a 4% increase. Attention will also be focused on the recovery in 2021.
In our call of the day, Goldman Sachs GS,
Analysts were optimistic that the US economy would rebound in 2021, but said there were three big risks to the recovery. The investment bank is forecasting gross domestic product growth of 6.6% this year, 2.5 percentage points above consensus. He expected a reduction in viral risk, induced by mass vaccination, as well as budgetary support for consumer spending to fuel a “mid-year consumption boom” and “very strong growth” in 2021.
The most serious downside risk, analysts noted, was the threat of a new vaccine-resistant strain of the coronavirus that causes COVID-19 – requiring a new vaccine and another round of inoculations. “Virus-sensitive spending would likely decrease during the development of a new vaccine, and although a new vaccine could be approved in less than five months, the consumption boom would likely be delayed until 2022,” the researchers said. Goldman analysts, led by Jan Hatzius, in a note. They added that preliminary evidence suggested that current vaccines protect against the new British strain, but were more mixed for the South African variant.
The second most worrying risk is that viral mutations “dramatically raise the bar” of herd immunity, either by being more infectious or by lowering the effectiveness of vaccines. This scenario would also delay the consumption boom. Finally, even if the vaccination roll-out and the hot weather reduce the spread of the virus, there is a risk that consumers will be more careful than expected, even if the downside would be small, they said.
More encouragingly, there were significant upside risks to Goldman’s 6.6% GDP growth forecast, including households quickly spending the savings they accumulated during the COVID-19 pandemic and the impact. new fiscal stimulus measures in 2021.
The tweet
This Morgan Stanley MS,
the graph shows the NFIB Small Business Optimism Index diverging from the Russell 2000 RUT,
index, suggesting that while sentiment can turn negative, small-cap stocks are up.
The steps
YM00 U.S. Equity Futures,
ES00,
NQ00,
pointed slightly higher before opening, at the start of a busy earnings week. European stocks also rose early in the session, helped by earnings and reports of acquisitions by online retailers Boohoo BOO,
and ASOS ASC,
Asian stocks have climbed overnight, in hopes that some economies will begin to recover from the COVID-19 pandemic with the easing of lockdowns and the progress of vaccine rollouts.
The buzz
On Sunday, top Biden aides began talks with a group of moderate Senate Republicans and Democrats over a $ 1.9 trillion coronavirus relief package.
Biden will reinstate coronavirus-related travel restrictions on foreign citizens coming to the United States from Brazil, the United Kingdom, Ireland and much of Europe on Monday, according to reports, also adding Africa South to the list.
The White House on Monday unveiled details of the new Buy American decree expected to be signed by the president. This will increase the threshold and price preferences for domestic products before the government can buy from a non-US supplier.
China overtook the United States as the world’s top destination for new foreign direct investment last year, according to UN figures released on Sunday.
Just days before fourth quarter results, Baird raised his price target for electric car maker Tesla TSLA,
at $ 728 per share from $ 488, saying “the bias for the share remains up,” in a note Monday.
GameStop GME,
Stocks jumped 42% in pre-market trading, after climbing 51% higher on Friday. The gains came after short-selling company Citron Research and speculative buyers organizing on Reddit clashed over the video game retailer.
AMC AMC,
Shares jumped 34% in pre-market trading, as the movie chain raised $ 917 million in debt equity to help it weather the COVID-19 crisis.
Shuffle playback
Flaming Lips is organizing a unique “space bubble” concert.
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