U.S. stock futures soared on Friday, suggesting that the S&P 500 is ready for its best week in three months, with investors betting that a new spending package for coronavirus relief will boost the economy.
Futures contracts linked to the S&P 500 rose 0.5%, indicating that the broad market indicator may continue to rise after closing at a record high on Thursday. The benchmark rose more than 4% this week, on its way to its biggest one-week gain since the week ended November 6.
High-tech Nasdaq-100 contracts rose 0.4%, and those linked to the Dow Jones Industrial Average rose 0.5%.
The market rebounded this week as President Biden moved forward with efforts to approve a $ 1.9 trillion aid package. Democrats are using a special procedure to move the stimulus bill forward: the Senate on Friday approved a budget plan that advances the reconciliation process necessary for the aid plan to pass a simple majority in the Senate.
New spending is seen by many investors as crucial to sustaining the economy, with coronavirus cases still high in parts of the United States.
“That would be a big boost for the economy.” said Edward Smith, head of asset allocation research at Rathbone Investment Management. “This certainly reduces any short-term risk, while we expect the vaccine implementation to be fully updated.”
Economists expect US employers to create 50,000 jobs last month.
Photograph:
Joe Raedle / Getty Images
The US jobs report for January, due at 8:30 am Eastern time, will show whether the economy is recovering from the winter slowdown. Employers are expected to have created 50,000 jobs in the past month, according to economists. Payrolls fell in December for the first time since the pandemic caused companies to close last spring. The unemployment rate is expected to remain stable at 6.7%.
Investors also remain focused on implementing Covid-19 vaccines, which can accelerate the economic recovery. Johnson & Johnson asked U.S. regulators on Thursday to authorize the emergency use of its Covid-19 single dose vaccine, setting the stage for a possible third vaccine to be available in the U.S. within weeks.
“The more vaccines are launched, the more people will start to move,” said Gregory Perdon, co-director of investments at private bank Arbuthnot Latham.
Johnson & Johnson shares rose more than 2% in the pre-market.
Market volatility has also eased this week, after skyrocketing in late January to its highest level since late October. The peak came when individual investors on online forums injected money into a handful of stocks, leading to frantic trading and sharp price jumps. The Cboe Volatility Index, an indicator of turmoil in the broader US stock market, fell to less than 22 on Friday, from 37 last week.
These heavily traded shares have lost their steam, with GameStop losing nearly 84% of its value so far this week, while AMC Entertainment Holdings has fallen 46%.
The popular trading app Robinhood Markets has removed the last of its trading limits for shares of both companies, according to its website. GameStop rose more than 4% in the pre-market, while AMC gained almost 3%.
In the bond markets, the yield on the 10-year Treasury bill rose to 1.162%, close to its highest closing level since March 2020, from 1.140% on Thursday. Yields fall when prices rise.
Abroad, the pan-continental Stoxx Europe 600 advanced 0.4%. French bank BNP Paribas’ shares rose more than 3% after he reported a less than expected drop in profit.
In Asia, most of the main benchmarks advanced at the close of trading. Japan’s Nikkei 225 gained 1.5% and South Korea’s Kospi Index closed 1.1% above. Hong Kong’s Hang Seng rose 0.6%. China’s Shanghai Composite fell 0.2%.
Write to Caitlin Ostroff at [email protected]
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