Stocks are kicking off the week at record highs as investors plow into firms that should benefit from President Joe Biden’s lofty $2 trillion infrastructure plan, but Wall Street’s not convinced that the White House will get everything it’s asking for as the proposal moves through Congress.
Shortly after the market open, the Dow Jones Industrial Average soared past a record closing high, jumping 297 points, or 0.9%, while the S&P 500, which closed at a record high Thursday, added 0.6%, and the tech-heavy Nasdaq climbed 1%.
Heading up gains in the S&P, shares of electric-vehicle maker Tesla are surging 6%, adding $37 billion in market value, after the firm’s late-Friday announcement that it delivered nearly 185,000 vehicles in the first quarter—beating its previous record of 180,570 deliveries in the fourth quarter and exceeding analyst expectations by about 10%.
A slew of the biggest market gainers Monday morning include stocks that should benefit from the impending economic reopening, with Norwegian Cruise Line, MGM Resorts and Carnival Corp. soaring 5.5%, 4% and 3%, respectively.
Meanwhile, buzzy software company Palantir Technologies is climbing more than 3%, adding roughly $1 billion in market value, thanks to a new $90 million five-year contract with the U.S. Department of Energy.
Shares of ailing brick-and-mortar retailer GameStop, on the other hand, are down about 6% after the firm filed a regulatory prospectus that would allow it to raise roughly $650 million in a share offering—a move that would dilute existing shareholder stakes by 5%, though it could help accelerate the firm’s push into ecommerce.
Ushering in the broad-market rally, yields on the 10-year Treasury—the risk-free asset that moves inversely to stocks—are down 2 basis points Monday morning, continuing a weeks-long tepid streak after surging by about 70 basis points in the first three months of the year.
Stimulus spending lifted the market to meteoric new highs during the pandemic, and now stocks are climbing—albeit slowly—as President Joe Biden looks to inject another $2 trillion into the nation’s economy, this time through infrastructure investments that are largely clean-energy focused. White House officials on Sunday touted Biden’s Build Back Better proposal, which was announced Wednesday, and defended the plan’s higher corporate tax rate of 28% (from 21% currently), but lawmakers on both sides of the aisle are pushing back on its provisions, setting the stage for grueling negotiations as the plan makes its way to Congress.
“Investors are largely withholding judgment on President Joe Biden’s Build Back Better agenda until the fiscal outlook becomes clearer in Congress,” Vital Knowledge Media Founder Adam Crisafulli said in a Monday morning note. “That said, stocks don’t think the White House will get anything close to what it’s asking for, which is why there isn’t too much nervousness about higher taxes, or a celebration of more deficit-fueled spending.”
In a Sunday evening note to clients, Wedbush Analyst Dan Ives upgraded Tesla to outperform and gave it a $1,000 price target, indicating he believes shares could surge another 43% over the next year. “The first-quarter delivery numbers released on Friday were a paradigm changer and show that the pent-up demand globally for Tesla’s Model 3/Y is hitting its next stage of growth as part of a green tidal wave underway,” Ives said, referring to government initiatives—like Biden’s lofty $2 trillion American Jobs Plan—to bolster clean-energy investments.
What To Watch For
Late Monday morning, Treasury Secretary Janet Yellen is slated for her first major speech since joining the Biden administration. She’s expected to argue for a global minimum tax on multinational corporations.