U.S. equity markets have reopened with a bullish tone after Monday's holiday amid expectations of stimulus that may be upcoming from the incoming Biden administration. Attention in the U.S. remains on Wednesday's inauguration, but this morning also included earnings from Bank of America (BAC) and Goldman Sachs (GS), with Netflix (NFLX) to come after today's closing bell.
ECONOMIC EVENTS: In the U.S., no economic data of note was reported this morning.
Treasury Secretary nominee Janet Yellen stressed the need to go "big" on stimulus in her prepared remarks as she began her confirmation hearing today. She also indicated the U.S. needs to take on and is prepared to take on China's abusive policies, according to her prepared remarks.
TOP NEWS: Big banks were the highlight of the morning's earnings report round-up, with Bank of America reporting better than expected earnings per share but lower than expected revenue, net of interest expense, for the fourth quarter. The lender also authorized a $2.9B share repurchase plan, with chairman and CEO Brian Moynihan saying the company "continued to see signs of a recovery" in Q4. Meanwhile, Goldman Sachs shares were 1% lower near noon after the bank reported upbeat Q4 results, with trading revenue rising 23% year-over-year in the quarter. Commenting on the results, the company said that the extreme volatility of 2020 is "unlikely to repeat." Additionally, shares of State Street (STT) rose 1% despite the bank having reported lower than expected headline earnings and guiding to a 14%-17% decline in net interest income in fiscal 2021.
In other earnings news, Halliburton (HAL) shares were 1% lower near noon after the oil field service giant reported better than expected Q4 earnings, with CEO Jeff Miller saying he is "optimistic about the activity momentum" in North America.
On the M&A front, Lumentum (LITE) agreed to acquire Coherent (COHR) in a cash and stock transaction valued at $5.7B. Under the terms of the agreement, which has been unanimously approved by the boards of both companies, Coherent stockholders will receive $100 per share in cash and 1.1851 shares of Lumentum common stock for each Coherent share they own. Following the news, Lumentum shares dropped 12% while Coherent shares surged 32% higher.
Meanwhile, General Motors (GM) shares rose 10% after GM and Cruise entered into a long-term strategic relationship with Microsoft (MSFT) to "accelerate the commercialization of self-driving vehicles." As part of the relationship, Microsoft will join General Motors, Honda (HMC) and institutional investors in a combined new equity investment of more than $2B in Cruise, bringing the post-money valuation of Cruise to $30B.
MAJOR MOVERS: Among the noteworthy gainers was Aclaris Therapeutics (ACRS), which skyrocketed 204% higher after announcing preliminary topline results from a 12-week clinical trial to investigate the safety, tolerability, pharmacokinetics and pharmacodynamics of ATI-450 in subjects with moderate to severe rheumatoid arthritis. Also higher was TransEnterix (TRXC), which gained 56% after receiving CE Mark approval for the intelligent surgical unit that enables machine vision capabilities on the Senhance Surgical System.
Among the notable losers was ProPhase Labs (PRPH), which declined 26% after a 3M share secondary offering priced at $12.50 per share. Also lower was NOV Inc. (NOV), which fell 8% after cutting its Q4 revenue guidance.
INDEXES: Near midday, the Dow was up 129.79, or 0.42%, to 30,944.05 , the Nasdaq was up 122.36, or 0.94%, to 13,120.86 , and the S&P 500 was up 23.05, or 0.61%, to 3,791.30 .
