Future U.S. stock markets rose on Wednesday with optimism that the launch of Covid-19 vaccines and progress toward an agreement on a new fiscal stimulus bill bode well for the economic rebound.
S&P 500 futures rose 0.5%, while Dow Jones Industrial Average futures gained 0.7%, suggesting that the two benchmarks will advance after the New York opening bell . Nasdaq-100 Index contracts rose 0.5%, pointing to gains in technology stocks a day after investors withdrew funds from the sector, dropping broader indicators.
Shares have been nervous in recent days, with major indices faltering daily between gains and losses.
On Wednesday, sentiment was fueled by signals that Democrats will try to bridge the gap on unemployment benefits and other issues, as they plan to complete a $ 1.9 trillion relief package in the coming days. Biden also said the United States would have enough Covid-19 vaccines for all American adults by the end of May, two months earlier than previously said.
“The vaccine launch is going very well compared to many expectations,” said Seema Shah, chief strategist at Principal Global Investors. “And at a time when it looks like the economy can recover on its own, we also have the prospect of a fiscal stimulus at the bottom and it’s leading a lot of people to improve their growth expectations in the United States.”
Optimism about the better economic outlook especially fuels demand for stocks in companies that would benefit when the economy returns to normal, said Chris Dyer, Eaton Vance’s director of global equities. This includes banking and energy stocks, which outperform the technology sector this year.
“We can see light at the end of the pandemic tunnel,” Dyer said. “Progress in vaccinations has led to confidence in economic recovery and you have seen how companies geared towards this economic recovery have worked well in recent months.”
The bond market has also calmed down in recent days after rising yields have caused investors to explode, leading to sharp falls in equities. The yield on the ten-year US Treasury bond rose to 1.449%, from 1.413% on Tuesday. This continues to fall from the 1.513% that came last month.
Top central bank officials have said the rise in yields reflects optimism about the economic outlook. Federal Reserve Governor Lael Brainard said Tuesday that the recent riot in the bond market appears on the radar screen. He noted that the Federal Reserve will not reduce support for the economy until it is on a stronger footing, reiterating comments made by other officials.
“The Fed has indicated very strongly that they are willing to be patient, but also [that] rising yields are an indication of strong growth, so it’s a good environment for equity participation, ”Ms Shah said.
Ahead of the market opening, Lyft rose nearly 5% after the shared travel company released strong February travel figures on Tuesday. Uber competitor also rose 3%.
Investors expect data on activity in the services sector of the Institute for Supply Management, at 10.00 ET. The figures are expected to show that activity in the sector expanded for the ninth consecutive month in February.
The Fed’s beige book report, which will be released at 2 p.m. ET, will feature the latest collection of business anecdotes, which will provide information on how companies are preparing for the reopening of the Fed. economy.
In commodity markets, Brent crude, the international benchmark for oil, rose 1.5 percent to $ 63.63 a barrel. Gold prices fell 0.7%.
Abroad, the Stoxx Europe 600 pancontinental rose 0.4%.
Most major Asian indices won by closing trading. China’s Shanghai composite index rose nearly 2%, while in Hong Kong, Hang Seng jumped 2.7%. The Japanese Nikkei 225 rose 0.5% and the South Korean Kospi rose 1.3%.
Traders are working Tuesday on the floor of the New York Stock Exchange.
Photo:
Colin Ziemer / Associated Press
Write to Will Horner to [email protected]
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