Traders work on the floor of the New York Stock Exchange.
NYSE
Future U.S. stock markets jumped on Sunday evening as a new Washington stimulus pattern headed toward the final step this week.
Futures contracts tied to the Dow Jones industrial average jumped 219 points, 0.7%. The S&P 500 and Nasdaq 100 gained 0.5% and 0.6%, respectively.
The move into futures came after the Senate on Saturday passed a $ 1.9 trillion economic relief and stimulus law, paving the way for extensions of unemployment benefits, another round of encouragement and aid to state and local governments. The Democratic-controlled House is expected to approve the bill later this week. President Joe Biden is expected to sign it before unemployment benefits programs expire on March 14th.
The new round of government spending could spark waves in the U.S. Treasury market, where 10-year benchmark yields have risen sharply in recent weeks. Yield rose to 1.62% on Friday after the start of the calendar year below 1%.
The rapid movement of the marked bond has also bothered equity investors, which has contributed to the weakness of stocks with high valuations.
Ten-year futures contracts fell 0.2% on Sunday night at the opening of trading, implying higher returns.
“10-year returns finally hit the rest of the asset markets. This is putting pressure on valuations, especially for the more expensive stocks that had achieved blood valuations,” said Mike Wilson, chief equity strategist. American by Morgan Stanley.
The stock market comes out of Friday afternoon’s rally which took some of the sting out of a tough week for high-flying boost names. The high-tech Nasdaq ended with a current loss of 2.1%, while the S&P 500 gained 0.8%. The Dow, more dependent on cyclical stocks, rose 1.8%.
Friday’s change doesn’t indicate the recent market weakness is over, but the divergence between tech and cyclical games shows that bullish history remains intact, Morgan Stanley’s Wilson said.
“The bullish market continues to be under the hood, with value and cyclicals at the forefront. Growth stocks may rejoin the party once the valuation correction and repositioning are completed,” Wilson said.
On the economic front, investors will be able to see wholesale inventory data starting Monday, January. Several economic measures in recent weeks have shown a strong recovery, including a better-than-expected February employment report released on Friday.