U.S. stock futures soared on Wednesday with optimism that the launch of Covid-19 vaccines and progress toward a new fiscal stimulus bill bodes well for the economic recovery.
Futures linked to the S&P 500 were up 0.5%, while those of the Dow Jones Industrial Average were up 0.7%, suggesting that both benchmarks will advance after the opening bell in New York. Nasdaq-100 contracts gained 0.5%, pointing to gains for technology stocks the day after investors withdrew funds from the sector, causing broader indicators to fall.
The stock has been tense for the past few days, with the main indices fluctuating daily between losses and gains.
On Wednesday, sentiment was fueled by signs that Democrats will seek to overcome differences in unemployment benefits and other issues as they plan to complete a $ 1.9 trillion aid package in the next few days. Biden also said that the United States will have enough Covid-19 vaccines for all American adults by the end of May, two months earlier than he had previously said.
“The vaccine launch is going extremely well compared to many expectations,” said Seema Shah, chief strategist at Principal Global Investors. “And at a time when it looks like the economy could recover on its own, we also have the prospect of a fiscal stimulus at the bottom, and this is driving many people to raise their expectations for growth in the US.”
Optimism about the better economic outlook is particularly fueling demand for shares in companies that would benefit when the economy returns to normal, said Chris Dyer, director of global equities at Eaton Vance. This includes banking and energy stocks, which are outpacing the technology sector this year.
“We can see the light at the end of the pandemic tunnel,” said Dyer. “The advance of vaccination has generated confidence in the economic recovery and you have seen companies oriented towards this economic recovery have performed well in recent months.”
The bond market has also calmed down in recent days, after a rise in yields has shaken investors, leading to sharp declines in stocks. Yield on 10-year US Treasury bonds rose to 1.449%, from 1.413% on Tuesday. This is still less than the 1.513% reached last month.
Senior central bank officials said the rise in earnings reflects optimism about the economic outlook. Federal Reserve Governor Lael Brainard said on Tuesday that the recent turmoil in the bond market is on his radar screen. She signaled that the Federal Reserve will not reduce support for the economy until it is on a stronger basis, reiterating comments made by other officials.
“The Fed has strongly indicated that it is willing to be patient, but also [that] rising yields are an indication of strong growth, so it is a good environment for stocks, ”said Ms. Shah.
Before the market opened, Lyft rose nearly 5% after the ride-sharing company released strong travel numbers in February on Tuesday. Competitor Uber also rose 3%.
Investors await activity data in the services sector from the Institute for Supply Management, due at 10am ET. The figures should show that sector activity grew for the ninth consecutive month in February.
The Fed’s beige book report, due to be released at 2 pm Eastern time, will offer the latest collection of business anecdotes, offering insights into how companies are preparing for the reopening of the economy.
In the commodity markets, Brent crude, an international benchmark in oil, rose 1.5% to $ 63.63 a barrel. Gold prices fell 0.7%.
Abroad, the pan-continental Stoxx Europe 600 rose 0.4%.
Most of the major Asian indices achieved gains at the close of trading. The Shanghai Composite Index of China rose almost 2%, while in Hong Kong, Hang Seng jumped 2.7%. Japan’s Nikkei 225 rose 0.5%, and South Korea’s Kospi rose 1.3%.
Traders work on the New York Stock Exchange on Tuesday.
Photograph:
Colin Ziemer / Associated Press
Write to Will Horner at [email protected]
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