Stock futures are rising, launching the S&P 500 to set a new record

Shares have risen in recent trading sessions, placing volatility caused by GameStop changes and other individual stocks in the rearview mirror. Investors are focusing on the prospect of a new batch of public spending. They say this could drive growth at a time when large companies are showing solid profits, but the broader economic outlook is incomplete.

Democrats won a series of votes last week by unblocking a process called reconciliation, which will allow the party to approve President Biden’s $ 1.9 trillion relief plan without Republican support in the Senate. House lawmakers aim to finalize and vote on a relief bill before the end of February.

The combination of strong quarterly profit reports from some of the largest U.S. companies and the possibility of further relief for the economy has given markets a blow to the arm, according to Daniel Morris, BNP Paribas ’chief market strategist Asset Management.

“It’s like your birthday and Christmas on the same day and all the markets are happy,” Morris said.

Another round of stimulus spending in the U.S., a net importer, would also be a big help for overseas stock markets, according to Mr Morris. “If your growth engines grow very well in the United States and China this year, that will help everyone,” he said.

Markets have also been bolstered by an optimized set of earnings for the holiday quarter from large U.S. companies. Toy maker Hasbro will have to inquire before the opening bell on Monday. After the markets close, commercial property Simon Property Group and gaming company Take-Two Interactive Software will follow.

Of the 295 S&P 500 companies that had reported early Monday, 81% had exceeded analysts’ expectations of earnings growth, according to FactSet.

Shares favored by online traders gathering on Reddit increased in premarket trading. GameStop added about 12%, BlackBerry 6.4% and AMC Entertainment Holdings 3.1%.

Oil markets continued to rebound, pushing Brent crude oil futures above $ 60 a barrel for the first time since the pandemic began in January 2020. The international energy benchmark rose 1 , 4%, to $ 60.17 a barrel. West Texas Intermediate futures, the main U.S. crude oil, rose 1.3% to $ 57.55 a barrel, extending a boost driven by declining crude supplies.

In another sign of growing optimism among investors, the yield on 10-year Treasury bills rose to 1.2% from 1.168% on Friday. Yields, which rise as bond prices fall, tend to gain when money managers become more bullish on growth and inflation prospects.

A measure of inflation expectations, known as ten-year inequalities and based on the difference between nominal Treasury yields and those protected by inflation, rose above 2.2%, its highest level since of 2014.

“It’s the speed of the movement in inflation [expectations] that sounds dramatic, “said Kit Juckes, Société Générale’s macro strategist.” The levels themselves, not so much. “

U.S. government bond auctions Tuesday, Wednesday and Thursday will be considered a test of investor appetite for Treasurys, Juckes said.

Treasury Secretary Janet Yellen told CNN on Sunday that the United States could return to full employment next year if lawmakers approved the Biden stimulus package.

Democrats are still debating who should be eligible for $ 1,400 in direct control and whether they can pass a $ 15 minimum wage as part of the pandemic-related stimulus package. Many Republicans have criticized Biden’s plan for being too broad and expensive after Congress approved a $ 900 billion relief plan in December.

Yields on government bonds also rose in Europe. The yield on ten-year German banknotes, the continent’s risk-free benchmark asset, rose to at least 0.421%, its highest level since September last year, at least 0.442% on Friday.

Shares advanced in foreign markets. Shares of banks and basic resource companies made profits in Europe, pushing the Stoxx Europe 600 pancontinental up 0.5%.

Among individual European stocks, Dialog Semiconductor jumped 17% after the UK-based manufacturer agreed to be bought by Japan’s Renesas Electronics in a deal that would value the company at around 4.9 billion euros ($ 5.9 billion ).

In Asia, the Shanghai composite index finished 1% higher. The Nikkei 225 rose 2.1% at the close after Nikkei Asia reported that Japan would consider lifting a state of emergency by coronavirus in some prefectures before a new deadline.

Shares of the SoftBank Group rose more than 4% in Tokyo after tech giant investor won markets to a quarterly profit of $ 11 billion, largely thanks to investment gains.

Write to Joe Wallace to [email protected]