US stock futures rose on Monday, suggesting major indices will widen their rise after the Dow Jones Industrial Average and S&P 500 closed at a record high last week.
Dow futures rose 0.4%, suggesting chip stocks in companies sensitive to the economic recovery will expand their gains. Contracts linked to the S&P 500 rose 0.3%. Nasdaq-100 futures rose 0.3%, signaling off-line gains in the technology sector.
The stock market last week picked up its pace more firmly after weeks of abrupt movements in the U.S. government bond market. Ten-year Treasurys yields have risen for six weeks in a row, the longest winning streak since December 2016. Some money managers have worried inflation will rise sharply, prompting the central bank to consider raising rates of interest in the next two years.
Federal Reserve officials have repeatedly tried to allay these fears and have reiterated that they will keep monetary policy loose for the foreseeable future to help the labor market recover. Investors are looking at the Federal Reserve’s upcoming monetary policy statement on Wednesday for more information on the health of the economy and the views of policymakers on rising bond yields and inflation prospects.
“The fear factor has already disappeared, so the markets are finding a balance. Bond yields will rise, but central banks will not back down, “said Carsten Brzeski, ING Groep‘s
no global macro research. “The Fed meeting will be clearly crucial and essential when it comes to educating the markets about what the Fed is doing.”
Investors have been grabbing money from safe-haven bonds as the economic outlook lights up. They have also begun to move away from the technology sector and become shares of producers and energy banks in recent weeks, which tend to benefit from an economic recovery. Bounce optimism has been driven by faster-than-expected vaccine deployment and the passage of an additional $ 1.9 trillion in fiscal stimulus.
“With the reopening of the economy, this fiscal stimulus in the form of checks will have a stronger impact on consumption,” Brzeski said. This is important because consumer spending accounts for more than two-thirds of U.S. economic output. “Lower-income households will spend this check almost entirely,” he added.
Some money managers are concerned that the large fiscal package could lead to sharply higher inflation and, for an extended period of time, force the Fed to raise interest rates earlier than policymakers have suggested.
Ten-year Treasurys yield fell Monday to 1.611%. It ended Friday with 1.634%, the highest since February 6, 2020.
“The Fed should send a message here that it continues to take into account the substantial progress required before the economy returns to pre-pandemic conditions, but it still won’t be too forceful because some of these moves will they are based on fundamentals, ”said James Ashley, head of international market strategy at Goldman Sachs Asset Management. “That’s right, how do you calibrate this message in a way that isn’t too bad or too sickly.”
Over the weekend, Bitcoin crossed the $ 60,000 mark for the first time on Saturday. On Monday, it traded again at about $ 56,020.86.
Abroad, the pan-continental Stoxx Europe 600 rose 0.5%.
The major equity indices in Asia ended the day on a mixed note. Shanghai’s composite index fell nearly 1% and South Korean Kospi closed 0.3% lower. Japan’s Nikkei 225 rose 0.2% and Hong Kong’s Hang Seng index gained 0.3%.
The stock market last week resumed its upswing.
Photo:
Nicole Pereira / Associated Press
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