Traders are working on the floor of the New York Stock Exchange.
NYSE
Over time, futures stocks held higher overnight on Sunday, while investors assessed the outlook for a higher Covid-19 exemption stimulus.
Dow Jones industrial average futures fell just 15 points. The S&P 500 futures and the Nasdaq 100 were little changed.
The stock market will emerge from a solid week to begin 2021, as investors watched the past of a violent siege of the Capitol and focused on the prospect of an additional fiscal stimulus after a democratic defeat of Congress. The S&P 500 climbed to a record high of 1.8% last week for four consecutive days. Dow and Nasdaq Composite Technology gained 1.6% and 2.4%, respectively, in the previous week, also reaching all-time highs.
“The advance is based on three main pillars: strong corporate gains, massive incentives and vaccine optimism,” Vital Knowledge’s Adam Crisafulli said in a note on Sunday. “Stimulus expectations are growing – Biden’s plan could be worth a few trillion dollars on paper, but what will be passed will probably be much smaller.”
President-elect Joe Biden promised a strong economic stimulus launch on Friday, which he said would be “in billions of dollars.” More details will follow in an official announcement on Thursday, six days before he is taken over for the position.
The need for additional incentives was underlined by the unexpected loss of jobs in December. The Labor Department reported on Friday that non-farm wages fell 140,000 as new blockade restrictions affected virus-sensitive industries, marking the first monthly drop since April.
The political turmoil is expected to continue this week and it remains to be seen when or if the markets will be affected. Democrats, with the support of some Republicans, are heading to start indictment proceedings in the House of Representatives against President Donald Trump, immediately after this week, for inciting the mob’s attack. The House Rules Committee is expected to expedite the removal procedures without hearings or votes of the committee.
For now, the market seems to be overtaking it, as Congress has successfully confirmed Biden’s election victory, and Democrats now in the majority of the Senate will follow another big stimulus. If these events start to delay or derail those incentive plans, traders may start to pay more attention.
Some on Wall Street see a retreat on the horizon for the market, especially after a surprisingly strong 2020. The S&P 500 gained 16.3% last year.
“After being bullish for a few months, we are certainly becoming more cautious in the stock market at these levels,” Matt Maley, chief market strategist at Miller Tabak, said in a note on Sunday. “We believe that the vast majority of the rally from the March lows is behind us … and that a correction will probably begin at some point in the first quarter of this year.”
Last week, the benchmark 10-year Treasury yield exceeded 1% for the first time since the March pandemic.
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