Illustrative photo.
Illustrative photo.

The S&P 500, Dow and Nasdaq hit record levels yet again, as traders looked ahead to the additional fiscal stimulus and other government spending likely to occur under President Joe Biden’s administration. Biden began his term on Wednesday by signing a number of executive orders to address the COVID-19 pandemic, enable environmental protection initiatives and roll back many of the Trump administration’s immigration policies, among other measures. He was also poised to sign additional executive orders on Thursday, according to FXEmprire.

The S&P 500 posted its best Inauguration Day return since Ronald Reagan’s second inauguration in 1985, according to an analysis by LPL Financial. And the index’s move from Election Day to Inauguration Day was its best ever, with the S&P 500 climbing more than 14% between Nov. 3 and Wednesday’s close.

4:06 p.m. ET: S&P 500, Nasdaq eke out fresh record highs as Biden announces more actions to combat COVID-19

Here were the main moves in markets as of 4:06 p.m. ET:

• S&P 500 (^GSPC): +1.22 (+0.03%) to 3,853.07

• Dow (^DJI): -12.37 (-0.04%) to 31,176.01

• Nasdaq (^IXIC): +73.67 (+0.55%) to 13,530.92

• Crude (CL=F): -$0.28 (-0.53%) to $53.03 a barrel

• Gold (GC=F): +$4.40 (+0.24%) to $1,870.90 per ounce

• 10-year Treasury (^TNX): +1.9 bps to yield 1.1090%

S&P 500 Price Forecast

The S&P 500 has broken a bit higher during the trading session, gaining ever so slightly to break above the 3850 handle. However, it looks as if we are running out of momentum which makes quite a bit of sense considering that we have been on an upward trajectory in ad infinitum. I believe that the 3800 level underneath should continue to be supported, but right now Wall Street is waiting to see how much “cheap money” it is about to get. After all, we are in the midst of earnings season and that might be the excuse to sell off the S&P 500, but the end result is to throw a big enough tantrum to make the Federal Reserve step in. Unfortunately, this is a beast of the Federal Reserve is making, and it is now something that they have to live with.

Apple’s stock price will soar 15% higher

Illustrative photo by Techcrunch.
Illustrative photo by Techcrunch.

Morgan Stanley raised its price target for Apple stock to $152 from $144 on Thursday, implying a 15.1% surge from Wednesday's close over the next 12 months, Bussiness Insider reported.

Apple gained as much as 3.3% on Thursday. Tech stocks have led indexes higher in recent sessions after Netflix's fourth-quarter earnings blew estimates out of the water.

Past earnings reports from Apple showed investments in its Services and Wearables businesses offsetting slowing iPhone sales. Yet the iPhone 12 lineup unveiled in late 2020 should reinvigorate handset revenue, Morgan Stanley said.

The 5G-capable iPhones were Apple's most successful product launch in five years, and demand continues to outstrip supply despite 78 million forecasted shipments in the December quarter, according to the team. Both Morgan Stanley's fiscal first-quarter and full-year projections for iPhone shipments exceed the consensus forecast.

Elsewhere in the lineup, the analysts see prolonged work-from-home and remote-learning activity propping up Mac, iPad, and Wearables revenues. Consumer survey data suggests computer and consumer electronic sales hit nine-month highs in the previous quarter as renewed COVID-19 lockdowns forced more people to stay home.

Though the data isn't specific to Apple, "we believe they served as strong tailwinds" for the company's computers and tablets, the team said.

Apple traded at $135.70 as of 11:40 a.m. ET Thursday, up 2.3% year-to-date. The tech giant has 71 "buy" ratings, 15 "hold" ratings, and three "sell" ratings from analysts.

Microsoft Stock betting on autonomous driving

Microsoft Corp. (MSFT), one of the leaders in the market for cloud services, is betting big on autonomous driving. The tech giant is one of several companies investing more than $2 billion in Cruise, a driverless-car startup owned by General Motors Co. (GM). Microsoft's goal is to provide services to the startup through its fast-growing Azure cloud platform, which is bolstering the company's sales amid the COVID-19 pandemic.

Investors will focus on how well Microsoft is continuing to weather the financial impact of the pandemic when the company reports earnings on January 26, 2021 for Q2 FY 2021. Microsoft's fiscal year (FY) ends in June.2 Analysts expect adjusted earnings per share (EPS) and revenue to rise, but at a significantly slower pace than in recent years.3

Shares of Microsoft have outperformed the broader market over the past year. The performance gap has widened since the pandemic-induced market crash that took place between late February and late March 2020. However, that gap has slowly narrowed since last summer. Microsoft's shares have provided a total return of 36.1% over the past 12 months, more than double the S&P 500's total return of 16.0%.

Auto stock is exploding

Tesla’s stock isn’t the only one in the auto space showing some electrified action to kick off 2021.

Somewhat under the proverbial radar, shares of General Motors and Ford are up 31% and 23%, respectively, year-to-date. Ford stock (F) was the top trending ticker on Yahoo Finance’s platform Thursday despite a lack of fundamental new news, underscoring the growing interest by investors to own the name.

“We believe a robust product cycle, favorable pricing environment for U.S. trucks, improved warranty performance, and restructuring savings could result in better-than-expected 2021 guidance, and prompt investors to anticipate a more aggressive turnaround trajectory,” Deutsche Bank auto analyst Emmanuel Rosner said about Ford in a note this week to clients. Rosner put Ford’s stock — still trading at a paltry forward price-to-earnings multiple of 9.5 times and relatively attractive 1.3% dividend yield — on his conviction buy list.

Despite GM shares getting a boost this week following Microsoft’s fresh $2 billion investment in the automaker’s autonomous tech business Cruise (valuing Cruise at $30 billion, or 38% of GM’s market cap; chatter of a spin-off is likely to increase), the stock still looks cheap relatively speaking. GM’s stock trades at a mere 8.3 times estimated forward earnings and offers a 1.4% dividend yield.

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