By Will Horner
U.S. stocks opened in a mixed fashion on Wednesday ahead of lawmakers voting on President Trump’s impeachment in his last week in office.
The S&P 500 rose less than 0.1% after the opening bell, suggesting that the broad market index may have a choppy day. The Nasdaq Composite Index rose about 0.2%, while the Dow Jones Industrial Average fell 2 points, less than 0.1%.
Shares fell this week after hitting record highs in early January, as investors assessed the prospect of further government spending against political unrest in Washington and the continued rise in Covid-19 cases. Energy and banking are among the best performers so far in the new year, with investors betting on companies that have performed poorly in 2020 and are expected to profit as the economy recovers.
“Markets will remain volatile for a while, but despite everything, we remain cautiously optimistic,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. “The amount of fiscal stimulus possible will protect risky assets, and there is still a lot of liquidity on the sidelines.”
U.S. inflation data released on Wednesday showed consumer prices only rose moderately last month, reflecting weak demand for a range of goods and services. Some economists expect inflation to accelerate as the economy grows faster later this year.
The Federal Reserve’s Beige Book report, due at 2 p.m. ET, will offer the latest collection of anecdotes on the Fed’s district affairs, offering insight into how businesses view the outlook for the economy.
“We know the economy is going to get bigger at some point, so the market is ready to look to the future,” said Willem Sels, director of global investments at HSBC Private Banking. “We are still in a risky environment.”
Before the market opened, General Motors rose more than 4% after the automaker announced the launch of a new electric truck business.
A liquidation in US government bonds eased on Tuesday evening following strong demand for an auction of new 10-year notes. On Wednesday, the yield on the 10-year Treasury bill edged down to 1.126%, from 1.136% on Tuesday. Bond yields fall as the price rises.
Bond yields, which had risen for seven straight days, are not expected to rise much more, Kassam said.
“Rates are capped where they are now, and the Fed has effectively put in place some form of yield curve control because it is committed to buying bonds,” he said. “I don’t think we’ll see rates go up much more because there is still a lot of demand.”
House lawmakers plan to vote on the president’s impeachment for the second time on Wednesday, just days before he leaves office. As political grudge has weighed on market sentiment in recent days, most fund managers are looking beyond developments in Washington to focus on the prospect of further fiscal stimulus.
“The market is largely focused on the fundamentals around a Biden administration,” Mr. Sels said.
Abroad, the Stoxx Europe 600 oscillated between gains and losses.
Among major European stocks, French retailer Carrefour jumped 15% after saying it was in talks with Canadian Alimentation Couche Tard over a possible merger.
In Asia, the main indexes ended the day mixed. Japan’s Nikkei 225 rose more than 1% and South Korea’s Kospi gained 0.7%. The Shanghai Composite Index fell 0.3%, while the Hong Kong Hang Seng fell 0.2%.
Write to Will Horner at [email protected]
(END) Dow Jones News Wire
January 13, 2021 at 9:47 am ET (2:47 pm GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.