US equities are expected to start a week of reduced gains.
Apple AAPL,
Tesla TSLA,
Facebook FB,
and Microsoft MSFT,
are ready to report the gains in a week full of action that also includes the first Federal Reserve political meeting of the Biden administration. In fact, nearly a quarter of the S&P 500 will show results, as companies account for 39% of the market value index, according to FactSet data.
The COVID-19 pandemic and the deployment of vaccines across the U.S. remain in focus as President Joe Biden begins work. Investors will also closely watch the U.S. fourth-quarter GDP reading on Thursday, and economists surveyed by MarketWatch expect a 4% increase. The focus will also be on recovery in 2021.
In ours call of the day, Goldman Sachs GS,
Analysts were optimistic about the recovery of the US economy in 2021, but said there were three major risks to the recovery. The investment bank expects gross domestic product growth of 6.6% this year, which is 2.5 percentage points above the consensus. A reduction in the risk of viruses, caused by mass vaccination, was expected, along with fiscal support for consumer spending to fuel a “mid-year consumption boom” and “very strong growth” in 2021.
The most serious negative risks, analysts noted, were the threat of a new strain resistant to the coronavirus vaccine caused by COVID-19, which requires a new vaccine and another round of inoculations. “Virus-sensitive spending is likely to decline as a new vaccine is developed, and while a new vaccine could be approved in less than five months, the consumption boom is likely to be delayed until 2022,” analysts said. of Goldman, led by Jan Hatzius. on a note. They added that preliminary evidence suggests that current vaccines protect against the new UK strain, but that they were more mixed for the South African variant.
The second most worrying risk is that virus mutations “significantly increase the bar” for herd immunity, either by being more infectious or by decreasing the effectiveness of vaccines. This scenario would also delay the consumption boom. Finally, while vaccination launches and warm weather reduce the spread of the virus, there is a risk that consumers will be more cautious than expected, although the disadvantage would be limited, they said.
More encouragingly, there were some significant upside risks to Goldman’s 6.6% GDP growth forecast, including households that quickly spent the savings accumulated during the COVID-19 pandemic and the impact of new fiscal stimulus in 2021.
The tweet
This Morgan Stanley MS,
the graph shows the Russell 2000 RUT divergent NFIB small business optimism index,
index, suggesting that while sentiment may turn negative, small-cap stocks are rising.
The markets
US stock futures YM00,
ES00,
NQ00,
it was pointing slightly higher before opening, at the start of a busy profit week. European stocks also rose during early operations, helped by profits and acquisition reports from online retailers Boohoo BOO,
and ASOS ASC,
Asian stocks rose overnight, with hopes that some economies would begin to recover from the COVID-19 pandemic, with the reduction of blockades and the development of vaccines.
The buzz
Biden’s top aides on Sunday began talks with a group of Senate Republicans and moderate Democrats over a $ 1.9 trillion coronavirus relief package.
According to reports, Biden will reinstate on Monday travel restrictions against coronavirus against foreign nationals arriving in the United States from Brazil, the United Kingdom, Ireland and much of Europe, the Republic says.
The White House on Monday unveiled details of the new Buy American executive order to be signed by the president. It will raise the threshold and price preferences for domestic products before the government can buy from a non-US supplier.
China surpassed the United States as the world’s top destination for new foreign direct investment last year, according to UN data released Sunday.
Just days before fourth-quarter earnings, Baird raised its price target for electric vehicle maker Tesla TSLA,
at $ 728 per share from $ 488, saying “the stock bias remains positive,” in a note Monday.
GameStop GME,
shares rose 42% in pre-market trading, after firing 51% more on Friday. The gains came after short-selling firm Citron Research and speculative shoppers flocking to Reddit faced the video game retailer.
AMC AMC,
shares jumped 34% in pre-market trade, as the movie chain raised $ 917 million in debt to help it get through the COVID-19 crisis.
Random reading
Flaming Lips stages a unique “space bubble” concert.
Need To Know starts early and updates up to the opening bell, though sign up here to get it delivered once in your email. The email version will be sent around 7:30 am East.
Want more for the next day? Sign up for The Barron’s Daily, a morning briefing for investors, which includes exclusive comments from Barron and MarketWatch writers.