Stocks bounce back, Yellen testimony eyed, BAC earnings, euro holds gains after ZEW

Wall Street shows gains

US stocks are off to a strong start as investors focus on President-elect Biden’s COVID relief bill and as earnings season heats up.  The US will see more stimulus in Biden’s first 100 days, but the question is will some Republicans in the Senate play ball with the Democrats.  It is very unclear how life after President Trump will be, but some Republicans up for re-election in 2022 could take Biden’s USD1.9 trillion plan as an opportunity to distance themselves from the Trump administration.  The headline figure will likely come down a bit but if Republicans show a willingness to coordinate with Democrats, risk appetite has not priced that in.  Biden’s cabinet appointees grilling in the Senate and the Trump impeachment proceedings will garner much attention, but many political insiders will look to see if some Republicans don’t immediately reject everything the Democrats bring to the table.

BoA announces huge buyback

Bank of America was the big earnings report this morning and Wall Street liked the USD2.9 billion buyback announcement and shrugged off the disappointing fixed-income trading results.  Fourth-quarter FICC trading revenue came in at USD1.74 billion, a miss of the consensus estimate of USD2 billion.  Equities trading revenue impressed at USD1.32 billion higher than the USD1.16 billion estimate.  EPS came in at USD 0.59 a four-cent beat, while net interest income came in at USD10.37 billion, slightly better than the consensus estimate.  BOA shares held onto earlier gains but they were nothing to get excited over.

The euro held onto gains against the dollar after better-than-expected German ZEW data.  Hope is coming back to Germany despite more restrictive measures.  Expectations are rebounding in Germany but still are not quite at the September levels.  If Friday’s German Flash PMI surprises to the upside, we could see the euro outperform.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya