Investors will continue to monitor progress towards more U.S. fiscal stimulus in the holiday shortened week ahead and while earnings season is starting to wind down there are still some big names left to report. On the economic calendar, U.S. retail sales figures and the minutes of the Federal Reserve’s latest meeting will be the main events to watch. Market participants will also be closely following Thursday’s hearing before the House Financial Services Committee on the recent trading turmoil in GameStop and other heavily shorted stocks and bitcoin is closing in on $50K. Here’s what you need to know to start your week.
- Stimulus
President Joe Biden’s $1.9 trillion Covid-19 relief package will move to the next stage during the week, with the House Budget Committee pulling all the components into a single piece of legislation.
Biden’s proposed spending package, coming on top of $4 trillion enacted by his Republican predecessor, Donald Trump, would have important consequences for a global economy that is slowly and unevenly recovering after last year suffering its worst downturn since the Great Depression of the 1930s.
On Friday, U.S. Treasury Secretary Janet Yellen urged G7 finance leaders to provide more fiscal support to promote a robust and lasting recovery, telling them “the time to go big is now.”
- Earnings
The S&P 500 and Nasdaq closed at record highs on Friday as expectations for new fiscal aid from Washington to help the U.S. economy recover bolstered risk appetite. Investors will be looking ahead to earnings from Walmart on Thursday for insights on the strength of consumer spending.
Investors will also be looking at earnings reports from hotels, cruise lines and other businesses that have been badly hit by the pandemic for indications of which could be the first to bounce back as it recedes.
Hilton Worldwide Holdings and Hyatt Hotels are expected to release their results on Wednesday, followed by Marriott, Norwegian Cruise Line and TripAdvisor on Thursday.
U.S. stock markets will be closed on Monday for the Presidents Day holiday.
- 3. Economic data
The highlights of the U.S. economic calendar will be data on retail sales and industrial production for January, which are expected to show that the economy got off to a strong start in 2021.
Investors will also be watching Thursday’s figures on initial jobless claims with the recovery in the labor market remaining slow. Labor market woes strengthen the case for President Biden’s proposed $1.9 trillion recovery package, which is under consideration in the U.S. Congress.
Meanwhile, minutes from the Federal Reserve’s January policy meeting are due out on Wednesday.
- Bitcoin $50K
Bitcoin reached a new record high on Sunday, rising above the $49,000 level for the first time.
Bitcoin received a boost after BNY Mellon last week announced it would help clients hold, transfer and issue digital assets. The move came just days after Elon Musk’s Tesla said it had bought $1.5 billion worth of the cryptocurrency and would accept it as a form of payment for its cars, signaling a push into the mainstream for the digital asset.
On Saturday, Bloomberg reported that Morgan Stanley’s investment arm is weighing whether to add the digital currency to its list of possible bets.
Some market participants though continued to advise caution.
“Investors must remember that bitcoin is not a simple, get-rich-scheme. In reality, it has been, and will continue to be, susceptible to downward price swings – especially when the short-term winners look to withdraw their earnings,” said Gavin Smith, chief executive officer of cryptocurrency consortium, Panxora Group.
- Stonks hearing
Executives from Robinhood, Citadel, Melvin Capital and Reddit will testify before the U.S. House Financial Services Committee on Thursday. The committee is examining how retail traders drove shares in GameStop and other heavily shorted companies to extreme highs, resulting in massive losses for hedge funds like Melvin that had bet against those shares.
Robinhood emerged as a popular venue to trade the stocks but was criticized for temporarily restricting trading in the hot stock.
The trading platform said it had to impose the restrictions after wild trading in the stocks triggered a $3 billion margin call its clearinghouse, straining the company’s balance sheet.
