Traders work on the floor of the New York Stock Exchange.
NYSE
U.S. stock futures jumped on Sunday night, with a new stimulus package from Washington headed for final approval this week.
Futures contracts linked to the Dow Jones Industrial Average jumped 219 points, or 0.7%. Those for the S&P 500 and the Nasdaq 100 compound gained 0.5% and 0.6%, respectively.
The move in the futures market came after the Senate passed a $ 1.9 trillion economic relief and stimulus bill on Saturday, paving the way for extensions of unemployment insurance, another round of stimulus checks and aid to state governments and locations. The Democratic-controlled House is expected to approve the bill later this week. President Joe Biden is expected to sanction it before unemployment benefits expire on March 14.
The new round of government spending may cause ripples in the US Treasury market, where the 10-year benchmark yield has risen sharply in recent weeks. Yield rose to 1.62% on Friday, after starting the calendar year below the 1% mark.
The rapid movement in the bond market also irritated equity investors, contributing to the weakening of highly rated stocks.
Futures contracts linked to the 10-year contract fell 0.2% on Sunday night at the opening of the trading session, implying higher yields.
“10-year yields have finally reached other asset markets. This is putting pressure on valuations, especially for the most expensive stocks that have hit bloody valuations,” said Mike Wilson, chief US equity strategist at Morgan Stanley, in a note.
The stock market is emerging from an afternoon high on Friday, which took some of the pain out of a tough week for big-name names. The high-tech Nasdaq ended with a 2.1% loss for the week, while the S&P 500 gained 0.8%. The Dow, more dependent on cyclical stocks, rose 1.8%.
Friday’s turnaround does not signal that the recent market weakness is over, but the divergence between technological and cyclical moves shows that the bullish story remains intact, said Morgan Stanley Wilson.
“The bull market remains under the hood, with value and cyclicals leading the way. Growing stocks may return to the party as soon as the valuation correction and repositioning are completed,” said Wilson.
On the economic front, investors will take a look at January’s wholesale stock data on Monday. Several economic measures in recent weeks have shown a recovery that is gaining momentum, including a better-than-expected job report in February, released on Friday.