Dow rises by 120 points, bank shares jump when Biden sticks to Powell to lead the Fed

Shares rose on Monday after President Joe Biden elected Jerome Powell to continue leading the Federal Reserve over Fed Governor Lael Brainard, reassuring investors worried about changing central bankers as the country’s economy tries to emerge from the Covid pandemic as they fight inflation levels that have not been seen. in three decades.

Futures on the Dow Jones Industrial Average rose 155 points, while the S&P 500 futures and the Nasdaq 100 futures were both up 0.4%.

Powell, a former private equity chief, was nominated to the Fed a decade ago by President Barack Obama. He went up to the top job under President Donald Trump and led a milestone reassessment of the Fed’s inflation targeting framework during the Covid crisis.

Lael Brainard, who was seen as Powell’s main contender and favored by progressives in Washington for her stances on banking regulation and climate change, is nominated for a deputy chair of the central bank.

Bank shares and government interest rates rose after the White House announced the Fed decision. JPMorgan’s and Morgan Stanley’s shares rose almost 2% in pre-market trading.

Powell’s name comes as inflation has exceeded expectations in recent months, leading the Fed to reverse its predictions that the price increase that accompanied the reopening of the economy would be “temporary”. The central bank slowed down its asset purchases in November, its first major downsizing of its 2020 emergency programs, and indicated that it could accelerate that process early next year.

Elsewhere, Tesla The shares rose and increased by more than 2% after CEO Elon Musk said that the electric car manufacturer Model S Plaid could be launched in China in the spring of 2022.

Modern the shares continued their upward momentum and rose 2.4% in pre-market trading after the FDA last week approved the company’s booster shot for all american adults. The stock has risen 14.1% over the past five sessions.

On the negative side, Activision Blizzard lost 1.4% after reports that CEO Bobby Kotick said he would consider resigning if he could not fix the company’s culture. The news came after reports that Kotick was aware of sexual abuse within the organization.

Covid News also weighed on market sentiment, as German Chancellor Angela Merkel warned that the country was seeing an increase in the virus.

Shares have a track record of post winnings during Thanksgiving week, which will potentially set the stage for a Santa rally at the end of the year.

Since 1950, the last five trading days in November have traditionally been positive, according to Sam Stovall, investment strategist at CFRA. At the same time, there is a two-thirds probability that the market is up the day before Thanksgiving Day and a chance of 57% the day after the holiday, said the strategist.

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The S&P 500 came after a winning week, up 0.3%, on the back of a series of fantastic earnings reports from major retailers and strong retail data from the US. Technology-heavy Nasdaq Composite rose 1.2% last week. However, the blue-chip Dow fell 1.3% during the period.

So far this month, the S&P 500 has risen by 2%, about to publish its second positive month in a row. The stock index has increased by more than 25% in 2021.

The US markets will be closed on Thursday on Thanksgiving Day. The stock exchange closes early at 13 ET on Friday.

– CNBC’s Patti Domm contributed reporting.

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