Wall Street Starts a Fresh Week at Record Highs

After the best single trading day so far in 2021 — with the S&P 500’s performance notching its best regular session since last June — market indexes are down slightly ahead of the opening bell today. After a few weeks of “owning short-sellers” and, more recently, fretting over interest rate hikes yet to materialize, market participants look to be going about the business of recalibrating new valuations for an economy getting set to bounce back from a year-long pandemic.

Speaking of the pandemic, news out this morning from The Washington Post states the Biden administration has helped foster an agreement between two Big Pharma rivals — Merck (MRK) and Johnson & Johnson (JNJ) — whereby Merck would assist in the manufacture of J&J’s just-released Covid-19 vaccine. Specific details are still forthcoming, but analysts are looking for a doubling of output for the single-shot J&J vaccine.

New Director of the CDC, Dr. Rochelle Walensky, in yesterday’s pandemic briefing expressed concern over new case rates plateauing at around 70K new cases per day in the U.S. With new variants helping the disease spread domestically and in different regions around the world, Walensky sounded a note of caution: the progress we have made to suppress the disease may be overrun without a pronounced increase in vaccinations. Merck’s assisting J&J should provide at least a partial remedy.

Later today, we will hear publicly from Fed Governor Lael Brainard and San Francisco Fed President Mary Daly about the state of the economy — particularly, what Fed officers are currently thinking about inflation creeping into the economy, big new stimulus soon to come, and a nagging unemployment situation up until now keeping the Fed bearish on rates. We’ll get more jobs data tomorrow and Friday; these accounts today should bring us something of a report card through the first two months of the new year.

Zacks Rank #2 (Buy)-rated Target (TGT) posted big beats in its Q4 earnings report this morning. Earnings of $2.67 per share outperformed the Zacks consensus by 14 cents and more than a dollar ahead of the year-ago earnings figure, on $28.34 billion in sales. This top-line result beat estimates by 3%, nearly $5 billion higher than the year-ago quarter. Shares are up 1.8% on the news; the company has earned nearly 71% year over year.

With a relatively murky outlook, Target has refrained from giving out new guidance; much will likely be determined by the size of the stimulus package out of Washington DC. In Q4, it was clear some of the previously allotted stimulus did make its way to Target’s coffers. Foot traffic improved in stores, and its e-commerce business has made strides over the past several quarters.

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