U.S. stock index futures rose in early Sunday trading as Wall Street prepares for the busiest earnings week, which will include reports from some of the biggest tech companies.
Futures contracts linked to the Dow Jones Industrial Average gained 74 points, indicating a jump of 90 points at the opening. S&P 500 futures advanced 0.33%, while Nasdaq 100 futures rose 0.56%.
Shares ended mixed on Friday – the S&P 500 and Dow closed in the red, while the Nasdaq Composite closed at a record high – although the three recorded gains for the week. The Dow Jones recorded its fifth positive week in six, while S&P posted its third positive week in four. Nasdaq advanced 4.19% last week to its best week since November and the fifth positive week in six, with Big Tech’s name stocks pushing the index to a new historic high.
The upward movement came when President Joe Biden tries to implement a $ 1.9 trillion stimulus program that many Republicans in Congress are opposed to. Tax relief includes direct checks to millions of Americans, aid to state and local governments, funding for vaccines and Covid tests, an increase in the minimum wage and improved unemployment benefits, among other things.
Lindsey Bell, chief investment strategist at Ally Invest, noted that any additional stimulus could lead to increased inflation.
“Right now, look for signs of inflation as a temporary or long-term trend. If it’s just a quick shock, we can see some market weakness without any major action by the Fed,” she noted. “On the other hand, persistently high inflation may force the Fed to consider raising rates and withdrawing support from the market.”
In an inflationary environment, Bell said that investors should favor the basic consumer goods, energy and financial sectors. She added that real estate and gold are among the other assets that can help protect against inflation.
Next week, 13 Dow components and 111 S&P 500 companies are expected to report earnings. Among the quarterly reports presented are those from Apple, Microsoft, Netflix, Tesla, McDonald’s, Honeywell, Caterpillar and Boeing.
According to Bank of America data, of the S&P 500 components that have already reported profits, 73% won both in sales and in EPS. The company said that this is similar to last quarter, when the number of companies hitting a record high.
The number of coronavirus cases continues to increase in the United States and abroad, but many economists predict a return to growth later this year.
“We continue to expect that a reduction in the risk of viruses due to mass vaccination, together with fiscal support for consumer spending, will lead to a consumption boom in the middle of the year and very strong growth in 2021,” said Jan Hatzius , chief economist at Goldman Sachs, in a note to customers over the weekend. “We currently project GDP growth of + 6.6% in the year, 2½ pp above the consensus,” he added.
However, the company noted that while risks such as insufficient fiscal aid now seem less likely, other risks remain. Hatzius cited that consumers remain more cautious than expected, as well as the evolution of a vaccine-resistant strain of virus, as potential headwinds for the market in the future.
The surgeon general chosen by Biden said on Sunday that the United States is running to keep up with the coronavirus mutation.
“The virus is basically telling us that it will continue to change and we have to be ready for it,” said Dr. Vivek Murthy to ABC News’ This Week.
“We have to be the first, to do a much better genomic surveillance, so that we can identify the variants when they appear and that means that we have to double public health measures, such as masking and avoiding internal meetings,” he added.
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