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article imageOp-Ed: A flight to sanity? Stocks solid rally on Inauguration Day

By Paul Wallis     Jan 20, 2021 in Business
New York - After four years of narcissistic hysteria, the market didn’t jump mindlessly into a rally. A solid, but not neurotic, upward move was the market’s response to the first day of the Biden presidency.
Market cynics like me were expecting yet another boom-bang-nothing firecracker response from the market. In a refreshing change of pace from “Tweet and be damned”, the S&P 500, Dow and NASDAQ didn’t go nuts. They got busy with credible upward moves.
United States indices are up on the year after a pretty rocky, debris-strewn 12 months. The NASDAQ did best over the year, helped by the pandemic to some extent as remote work and demand drove the big listed stocks. The story’s just starting, though. The NYSE has managed to get out of the grave, too, another positive indicator for a recovery, if not quite yet out of the bassinet.
It’s reporting season, with a lot of blue chip market heavyweights expected to report next week on the fourth quarter of 2020. While miracles are definitely not expected, these reports will clarify future moves and trends. Clarity has been missing for these four years, and some solid projections would be a nice change, too.
A flight to sanity?
The most noticeable thing about the market move is that consumer stocks, condemned for the last year, are now showing signs of life. The big Netflix jump is hardly a surprise, but it was a good strong move, up 17%. Netflix also flagged possible share buybacks, reinforcing that price bandwidth.
Also unsurprising but welcome was a clear flight to quality. Alphabet NASDAQ:GOOGL, Amazon NASDAQ:AMZN, Apple NASDAQ:AAPL and Microsoft NASDAQ:MSFT all rose in the 4-5% range before their reports come out. The stocks moved in parallel. This move is a core major market investment move, pretty common in the first quarter of almost any year, but will cheer up a lot of investors.
What next? Everything.
It’ll be interesting to see how the markets move without all the endless distractions and basically totally nuts new situations of recent years. The trade war, tariffs, sector issues, and above all the ability of businesses to move forward and take positive steps are the next big issues.
This “recovery” will also be a micro/macro shakeout in some ways. The pandemic has been truly hideous for most businesses. The unexpected bright spot in all this is that some businesses and people are showing a distinct preference for the leaner, cleaner, way of doing remote business. They’re also showing a preference for the lower costs and high-efficiency management options. Most businesses didn’t like the changes forced by the pandemic, but after the shock wore off, they got a grip on what was required pretty quickly. They set up new modes of business and made them work.
The question is now whether a return to “normal” is good enough. If the capital markets get into a good consistent cruise mode, maybe not. The good news about that is that lower costs will facilitate rehiring and business initiatives. Some good had to come out of this appalling mess, and this may be it.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
More about Stock market moves Inauguration Day 2021, Alphabet NASDAQGOOGL, Amazon NASDAQAMZN, Apple NASDAQAAPL, Microsoft NASDAQMSFT
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