On Wednesday, closing at its all-time highs, the New York Stock Exchange gained ground, celebrating the swearing-in of Joe Biden, now formally the 46th President of the United States. Investors are enthusiastically expecting the implementation of the ambitious $1,900 billion economic support package by the incoming president. In the meantime, internet stocks are growing in the aftermath of Netflix’s stock, which jumped almost 16 percent in the fourth quarter following better-than-expected results.
The Dow Jones added 0.83 percent to 31,188 points, while the large S&P 500 index rose 1.39 percent to 3,851 points, and the Nasdaq Composite index, heavy in technology and biotech companies, soared 1.97 percent to 13,457 points. All three indices finished at a record peak at the close.
The S&P communications services index led the increase by industry with a rise of 3.7 percent, real estate monitoring took a 2 percent leap, consumer durable goods grew by 2.2 percent, and technology stocks improved by 2 percent. Financials have dropped by -0.7 percent at the rear of the pack and the energy sector has stayed steady that had been over-performed over the past few weeks.
Netflix advertising, which now has more than 200 million users, has made markets positive about the future effects of recent corrections to social networks and internet stocks. Alphabet Inc. (GOOGL) took +5.36% to $1880.07 on Wednesday; Facebook, Inc. (FB) grew +2.44% to $267.48; Amazon.com, Inc. (AMZN) received +4.57% to $3263.38; Twitter, Inc. (TWTR) leapt +3.64% to $47.6; Microsoft Company (MSFT) jumped +3.65% to $224.34; while Apple Inc. (AAPL) rise by +3.29% to $132.03.
On Tuesday, Bank of America Merrill Lynch published an investor survey, demonstrating that liquidity levels for fund managers are currently extremely poor. This is a revenue indicator since it typically correlates with investor over-optimism. The present high valuations on the stock market reinforce the possibility of reversal. However, amid heightened uncertainty and the unknowns associated with Covid-19 like new variants or vaccination rate, most equity strategists remain cautious regarding capital market developments in 2021.
However, the latest increase in stock indices to new highs indicates that, according to economists, these bullish assumptions may already have been absorbed into share markets, in particular for ‘technics’ whose valuations are entering the speculative bubble.
According to the popular stock market adage, investors may be tempted to “sell the news” after “buying the rumor” at the slightest bad news, particularly on the health front (disappointing outcomes, delay in vaccinations, or the implementation of the Biden plan).