Dow Jumps 150 Points, Stocks Brush Off Trump's Impeachment Hearing

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Topline

The major stock market indexes are at record highs again as investors look past the expected acquittal of former President Donald Trump and focus on corporate earnings that keep shattering expectations and another massive fiscal stimulus package expected to pass before mid-March.

Key Facts

Shortly after the market open, the Dow Jones industrial average and S&P 500 jumped 150 points, or 0.5%, and 0.6%, respectively–both ticking up past their record Monday closes after slipping slightly on Tuesday; the tech-heavy Nasdaq, which closed at a high Tuesday, also ticked up 0.5%.

Shares of Twitter are surging 9% and hitting a new high after the firm–heavily scrutinized for banning Trump from the platform–shattered Wall Street expectations with earnings of 38 cents per share on roughly $1.3 billion in revenue last quarter; the firm reported 192 million daily active users, roughly 70% more than a year ago.

Other stocks outperforming the market after reporting better-than-expected earnings since Tuesday’s close include ride-sharing firm Lyft, which is surging 11%, apparel-maker Under Armour, up 8%, and health-information firm Iqvia, up nearly 5%.

The U.S. consumer price index, a key measure of inflation, rose 0.3% in January, according to the Bureau of Labor Statistics on Wednesday, falling in line with expectations and therefore likely to temporarily ease concerns that rapid price spikes could threaten the economic recovery.

Global markets were also climbing Wednesday, with Japan’s Nikkei 225 closing up 0.2%, while England’s FTSe 100 climbs 0.3%, and Germany’s DAX index ticks up 0.1%.

Crucial Quote 

“The second impeachment of a U.S. President–a major, far-reaching political event in the world’s largest economy–would normally have Wall Street and stock markets around the world in a tailspin. But this is not the case,” Nigel Green, the CEO of $12 billion advisory deVere Group said Friday morning. “Unless the Democrats are unable to get through another round of fiscal stimulus because of the proceedings, it’s likely that markets will continue to ignore the Senate. They’re looking ahead, not back.”

Key Background

Democrats are expected to pass the final stimulus bill by mid-March, when a slew of government benefits under the last package passed in December are slated to expire. Last week, both chambers of Congress approved a joint budget resolution that will allow Democrats to pass President Joe Biden’s lofty $1.9 trillion relief plan without any Republican votes, but the package will likely need to be trimmed down to about $1.5 trillion to satisfy the party’s more conservative lawmakers. 

What To Watch For

Federal Reserve Chair Jerome Powell is slated to speak about the state of the U.S. labor market at the Economic Club of New York at 2 p.m. Eastern Wednesday.  Despite the consumer price index report showing no worrying signs of inflation, he’s expected to defend the Fed’s current monetary policy framework and push for fiscal stimulus while dismissing both inflation and financial froth concerns, notes Vital Knowledge Media Founder Adam Crisafulli. 

Chief Critic

“The stock market is not worried about inflation and continues to hit record highs, but the bond market is worried about inflation with the 10-year Treasury yield climbing back above 1%,” Nancy Davis, the founder of Greenwich, Connecticut-based Quadratic Capital Management, said Wednesday. “My biggest worry for the markets is the potential for stagflation, which is inflation coupled with no economic growth. It is probably the worst-case outcome for investors because almost no asset class performs well; stocks and bonds tend to fall together in stagflationary environments.”

Further Reading

Stimulus Check Debate Wears On As House Committees Begin Work On Biden’s $1.9 Trillion Plan—Here’s What To Expect (Forbes)

Dow Slips 100 Points Despite Blowout Earnings As Morgan Stanley Warns ‘Greed Continues To Overcome Fear’ (Forbes)