President-elect Joe Biden moves into the White House in the coming week with the biggest stock market tailwind since a presidential Election Day going back to at least 1952, CNBC informed.
According to CFRA data that begins that year, the near 13% gain since Nov. 3 would be the biggest increase in the S&P 500 between the election and inauguration if the gains hold. President John F. Kennedy’s 8.8% gain had been the best, followed by President Dwight Eisenhower, with 6.3%, and President Donald Trump, with 6.2%.
Biden’s promise of the $1.9 trillion relief package he announced Thursday is one of the reasons for the stock market’s surge, and it will be a big focus of markets in the week ahead as investors handicap its chances of winning congressional approval.
The Martin Luther King Jr. Day holiday starts off the week, and over the next four days several dozen S&P 500 companies report earnings. Bank of America, Goldman Sachs, IBM, Intel and Procter & Gamble are among the companies reporting.
The $1.9 trillion stimulus package is at the top of the agenda. But there is also significant focus on whether his administration will be better at controlling the pandemic and rolling out the vaccine, as he has promised.
“This is the number he came in at. Where do negotiations go from here?” Quincy Krosby, chief market strategist at Prudential Financial, said of the $1.9 trillion package. She pointed to worries about a weakening economy, evident in December’s retail sales data, down a surprising 0.7%, and weekly jobless claims, at the worst level since August.
“You could argue this is Covid-related and therefore what is most important going forward is to see the logistics of the vaccines, inoculations gain orderly momentum. That is crucial for the market,” she said.
Krosby said the market is focused on the inauguration.
“They want to see it go smoothly, and that there’s not any security lapse. The market absorbed the events of Jan. 6. The market looked ahead and figured out that at this point it was a one-off, and the market ended higher on Jan. 6,” she said. “But always the market becomes much more defensive if what we considered an isolated event suddenly broadens out.”
There will be heightened security surrounding the inauguration after a mob of Trump supporters assaulted the Capitol while Congress was in the process of confirming the Electoral College vote. The House last week voted to impeach Trump for inciting the mob, and now there is concern about further incidents in Washington or at state capitals.