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Jan. 19, 2021, 4:26 p.m. EST

Dow snaps 3-day slide, stocks kick off week with gains as Yellen calls for more fiscal aid

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By William Watts and Sunny Oh

U.S. stocks rose Tuesday, with technology stocks leading gains, as Janet Yellen in her Senate confirmation hearing called for more fiscal aid for the pandemic-battered economy.

Investors also prepared for the inauguration of President-elect Joe Biden on Wednesday and watched a stream of fourth-quarter earnings.

Markets were closed on Monday in observance of the Martin Luther King Jr. holiday .

On Friday , stocks closed lower for the day and week, with the Dow posting a weekly loss of 0.9%, the S&P 500 and Nasdaq Composite both fell 1.5% on the week. However, the small-capitalization Russell 2000 index /zigman2/quotes/210598147/delayed RUT +0.04% posted a weekly gain of 1.5%.

Yellen is Biden’s nominee to replace Treasury Secretary Steven Mnuchin, and during Tuesday’s confirmation hearing she said more fiscal aid was needed to avoid a protracted economic recession as a result of the COVID-19 pandemic.

“Economists don’t always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later,” Yellen wrote in prepared testimony . Yellen also warned that deficits would need to enter a sustainable path, at some point.

“But right now, with interest rates at historic lows, the smartest thing we can do is act big,” she said. 

Yellen also tamped down some fears about a sweeping slate of higher taxes under the Biden administration, saying it would not pursue a complete repeal of the 2017 Trump tax cuts, a concern that has bedeviled investors fretting corporations could face higher levies.

Live blog: Yellen to champion Biden’s economic plan at confirmation hearing

See : Why dollar bears aren’t afraid of Janet Yellen

The President-elect last week unveiled a $1.9 trillion relief package, but there are expectations it will be watered down by the Senate, which is split 50-50 between Republicans and Democrats, with Vice President-elect Kamala Harris set to provide the tiebreaker, noted Raffi Boyadjian, senior investment analyst at XM, in a note.

Read : Biden’s ‘rescue America’ plan is big. How its trillions could help both Wall Street and Main Street

“Yellen’s unequivocal justification for greater federal support to millions of U.S. businesses and individuals still struggling from the pandemic is seen as boosting the chances of the package passing through Congress,” Boyadjian said.

Those potential hurdles mean investors should be wary of getting too far ahead of themselves, Boyadjian and other analysts warned.

“Crucially, Senate Republicans (and not a few Democrats) seem all over the board on what elements they will or won’t support in the new economic program,” said Christopher Smart, chief global strategist at Barings Investment Institute, in a note.

“Traditional Republican concerns over budget deficits have been overwhelmed by last week’s impeachment of President Trump and what how best to unify the party. But any hints at all may move markets through the week,” he said.

Meanwhile, COVID-19 continues to spread rapidly. The U.S. added at least 142,588 new cases on Monday according to a New York Times tracker , and counted a total of more than 400,000 deaths .

Investors also parsed another round of earnings, including mixed results from Bank of America Corp . /zigman2/quotes/200894270/composite BAC -3.40% even as Goldman Sachs Group Inc. /zigman2/quotes/209237603/composite GS -2.53% smashed earnings expectations. Investors also digested a slew of quarterly results from major banks on Friday, when JPMorgan Chase & Co. /zigman2/quotes/205971034/composite JPM -2.65% , Citigroup /zigman2/quotes/207741460/composite C -2.27% and Wells Fargo /zigman2/quotes/203790192/composite WFC -3.70% reported their earnings updates.

-With assistance from Mark DeCambre

/zigman2/quotes/210598147/delayed
US : US Composite
2,201.05
+0.88 +0.04%
Volume: 2.20M
Feb. 26, 2021 4:30p
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/zigman2/quotes/200894270/composite
US : U.S.: NYSE
$ 34.71
-1.22 -3.40%
Volume: 70.93M
Feb. 26, 2021 4:00p
P/E Ratio
18.56
Dividend Yield
2.07%
Market Cap
$299.66 billion
Rev. per Employee
N/A
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/zigman2/quotes/209237603/composite
US : U.S.: NYSE
$ 319.48
-8.28 -2.53%
Volume: 3.73M
Feb. 26, 2021 4:00p
P/E Ratio
12.92
Dividend Yield
1.57%
Market Cap
$109.92 billion
Rev. per Employee
$1.31M
loading...
/zigman2/quotes/205971034/composite
US : U.S.: NYSE
$ 147.17
-4.01 -2.65%
Volume: 19.83M
Feb. 26, 2021 4:00p
P/E Ratio
16.56
Dividend Yield
2.45%
Market Cap
$449.09 billion
Rev. per Employee
$498,110
loading...
/zigman2/quotes/207741460/composite
US : U.S.: NYSE
$ 65.88
-1.53 -2.27%
Volume: 24.18M
Feb. 26, 2021 4:02p
P/E Ratio
13.10
Dividend Yield
3.10%
Market Cap
$137.17 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203790192/composite
US : U.S.: NYSE
$ 36.17
-1.39 -3.70%
Volume: 39.47M
Feb. 26, 2021 4:02p
P/E Ratio
88.96
Dividend Yield
1.11%
Market Cap
$149.53 billion
Rev. per Employee
$293,069
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