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Wall Street Hits Records Wednesday     01/20 15:55

   Wall Street marked the dawn of President Joe Biden's administration with 
stocks rallying to record highs as hopes build that new leadership in 
Washington will mean more support for the struggling U.S. economy.

   (AP) -- Wall Street marked the dawn of President Joe Biden's administration 
with stocks rallying to record highs as hopes build that new leadership in 
Washington will mean more support for the struggling U.S. economy.

   The S&P 500 rose 1.4%, topping its previous all-time high set earlier this 
month. The Dow Jones Industrial Average, Nasdaq composite and Russell 2000 
index of smaller companies also notched record highs, powered by gains in 
technology, communications, health care and most other sectors.

   Biden, now the nation's 46th president, has a flurry of executive actions at 
the ready. He has also pitched a plan to pump $1.9 trillion more into the 
struggling economy, hoping to act quickly as his Democratic party takes control 
of the White House and both houses of Congress.

   The hope on Wall Street is that such stimulus will help carry the economy 
until later this year, when more widespread COVID-19 vaccinations get daily 
life closer to normal. Such hopes have helped stocks and Treasury yields rise, 
even as the worsening pandemic digs a deeper hole for the economy. Spiraling 
coronavirus counts and deaths have more workers applying for unemployment 
benefits and shoppers feeling less confident.

   "Most of Wall Street is assuming that the second half (of 2021) is when we 
will see pent-up demand start to show up in the economy, and that will push 
economic indicators higher and will likely cause a ramp up in earnings 
projections," said Sam Stovall, chief investment strategist at CFRA.

   The S&P 500 rose 52.94 points to 3,851.85. The Dow gained 257.86 points, or 
0.8%, to 31,188.38. The Nasdaq climbed 260.07 points, or 2%, to 13,457.25. The 
Russell 2000 picked up 9.48 points, or 0.4%, to 2,160.62.

   A better-than-expected start to earnings reporting season also helped lift 
the market Wednesday. Analysts came in with low expectations, forecasting the 
big companies in the S&P 500 will report a fourth straight drop in earnings per 
share because of the damage from the pandemic. But the vast majority of the 
earliest reports have managed to top forecasts.

   Netflix jumped 16.9% for the S&P 500's biggest gain after it said it ended 
last year with more than 200 million subscribers. It also said it made more in 
revenue during the end of 2020 than analysts expected, though its earnings fell 
short of forecasts. Business is good enough for the company that it says it 
likely doesn't need to borrow anymore to cover its day-to-day operations.

   In Washington, the Biden administration took control of the White House from 
Donald Trump, who pointed again on Wednesday to the stock market's level as 
validation of his work.

   Trump's preferred measure is often the Dow Jones Industrial Average, even 
though the S&P 500 is much more important to most workers' 401(k) accounts. 
Under Trump, the Dow had an annualized return of 11.8% from his inauguration 
until his last day in office, according to Ryan Detrick, chief market 
strategist for LPL Financial. That's better than any Republican president since 
Calvin Coolidge during the roaring 1920s, but it's not as good as the returns 
for Bill Clinton or Barack Obama.

   Trump has said in the past that he should get credit for the stock market's 
gains following his election but before his inauguration. The market got a 
"Trump bump" then on anticipation of lower tax rates, less regulation on 
companies and faster economic growth. Much of that did come to fruition, but 
the COVID-19 pandemic and the government's response to it upended everything in 

   Gains for stocks have also been accelerating since Biden's election, before 
his inauguration, on enthusiasm about COVID-19 vaccines and hopes that he and 
Congress can deliver more stimulus for the economy. The bump for stocks between 
the most recent Election Day and Biden's inauguration is bigger than Trump's 
bump before his inauguration.

   "The market is up more than 13% since Election Day," Stovall said, noting 
that since World War II, the S&P 500 has risen an average of 3.5% in the first 
100 days of a Democratic president's administration, versus an average gain of 
0.5% when a Republican was in the White House.

   Janet Yellen, Biden's nominee to be Treasury secretary, told the Senate 
Finance Committee during her confirmation hearing on Tuesday that the incoming 
administration would focus on winning quick passage of its $1.9 trillion plan.

   "More must be done," Yellen said. "Without further action, we risk a longer, 
more painful recession now -- and long-term scarring of the economy later."

   Analysts have been expressing concerns about pricey stock values heading 
into the latest round of corporate earnings, but they look more reasonable amid 
the backdrop of historically low interest rates, said Solita Marcelli, chief 
investment officer, Americas, at UBS Global Wealth Management. The low rates, 
along with new stimulus and the continued rollout of vaccines, will likely help 
bolster markets and the recovery.

   "We think that global growth is going to continue to pick up," she said.

   Companies will need to meet the market's expectations -- including for a 
huge rebound in profit growth through 2021 -- to validate the big runs for 
their stock prices during 2020, even as their profits plummeted. Stocks of 
several companies slipped on Wednesday, even though they reported stronger 
profits than expected. Procter & Gamble fell 1%, for example.

   The yield on the 10-year Treasury rose to 1.09% from 1.07% late Tuesday.

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