Wall Street opens higher as focus shifts to Biden

Stocks are opening higher on Wall Street Tuesday as the earnings reporting season for US companies gets into high gear and as traders turn their focus to the transition to the administration of President-elect Joe Biden. The S&P 500 was up 0.7% in the early going. The Nasdaq and a measure of small-company stocks did even better.

Biden’s nominee for Treasury secretary, former Federal Reserve Chair Janet Yellen, begins her confirmation hearings Tuesday morning in front of the Senate Finance Committee. Goldman Sachs and Bank of America reported their latest quarterly results, and Netflix reports after the closing bell.

World markets were mostly higher Tuesday as the coming changing of the guard in the US raised hopes for more support for the economy and more aggressive measures to fight the pandemic.

Benchmarks were higher in Paris, London, Tokyo and Hong Kong but slipped in Shanghai. World markets were subdued on Monday, with US exchanges closed for a holiday.

Analysts say attention is focused on Wednesday’s inauguration of Joe Biden as president.

Signaling determination to move swiftly, Biden’s nominee for treasury secretary, former Federal Reserve chair Janet Yellen, is urging Congress to do more to fight the recession to avoid an even worse downturn.

In testimony prepared for her confirmation hearing on Tuesday before the Senate Finance Committee, Yellen said more aid is needed to get coronavirus vaccines distributed - key to ending outbreaks - to reopen schools and to help families struggling with job losses stay fed and housed.

“The positive shift in investor optimism ahead of inauguration day is a clear signal the market is leaning towards an early stamp of approval on the Biden administration policy agenda,” Stephen Innes of Axi said in a commentary.

Germany’s DAX gained 0.4% to 13,902.79 and the CAC 40 in Paris rose 0.3% to 5,634.29. Britain’s FTSE edged 0.2% higher, to 6,734.19. US futures also augured gains, with the contract for the S&P 500 up 0.7% and that for the Dow industrials trading 0.5% higher.

Worries over possible unrest or other security threats following the attack on the Congress earlier this month seem to have abated somewhat as investors study the implications for markets of further stimulus.

“The concerns over the Presidential inauguration tomorrow, which weighed on sentiments yesterday, have receded with fiscal stimulus business as usual regaining ascendancy,” Jeffrey Halley of Oanda said in a report.

Last week, Biden proposed a $1.9 trillion relief plan to provide more aid to American families, businesses and local communities and more support for vaccine production and distribution.

While Democrats have endorsed the effort, many Republican lawmakers have expressed concerns about the price tag given soaring federal budget deficits.

Yellen said that she and Biden were aware of the country’s rising debt burden, but that ultra-low interest rates make spending more now a smart choice.

The Senate Finance Committee hearing with Yellen on Tuesday is one of several that the Senate will be holding as the incoming Biden administration tries to get its top Cabinet officials in office quickly.

Adding to the sense of urgency, coronavirus outbreaks have been gaining even as states work to get COVID-19 vaccines into the arms of as many people as possible.

Coronavirus deaths are rising in nearly two-thirds of American states as a winter surge pushes the overall toll toward 400,000 amid warnings that a new, highly contagious variant is taking hold.

During Asian trading, Hong Kong’s Hang Seng gained surged 2.7% to 29,642.28 and the Nikkei 225 in Tokyo gained 1.4% to 28,633.46. South Korea’s Kospi jumped 2.6% to 3,092.66. In Australia, the S&P/ASX 500 rose 1.2% to 6,742.60. The Shanghai Composite index slipped 0.8% to 3,566.38. India’s Sensex jumped 1.6% and shares rose in most other markets aside from Malaysia and Indonesia.

On Monday, trading got off to a slow start for the week with U.S. markets closed and the reaction to news that the Chinese economy grew 2.3% in 2020 after a sharp contraction early in the year was subdued.

Treasury yields have been climbing on expectations the U.S. government will borrow much more to pay for the additional stimulus proposed by President-elect Joe Biden, in addition to improved economic growth and higher inflation. The yield on the 10-year Treasury zoomed above 1% last week for the first time since last spring earlier this month and briefly topped 1.18% last week. The yield on the 10-year Treasury was 1.11% on Tuesday.