Tourists take a picture of the bull near the New York Stock Exchange.
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Futures on major US stock indices rose on Thursday night just hours after the S&P 500 closed at a record high and President Joe Biden signed significant stimulus legislation.
Dow futures added 60 points and suggested a gain of a similar magnitude when regular trading resumed on Friday. Both Nasdaq 100 and S&P 500 futures added about 0.2%.
US equities rose to record levels during Thursday’s regular session, as a resurgence of technology stocks returned, and the $ 1.9 trillion Covid-19 aid package became law. The S&P 500 jumped 1% and reached a new high, breaking its previous record on February 16.
The relatively late Dow Jones industrial average finished 188.57 points after collecting more than 300 points earlier in the session at an intraday record.
“While we expect conditions to remain volatile, the latest developments in three key market factors – stimulus, pandemic news and inflation data – indicate an increase in equity,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management.
“The stimulus is substantially higher than expected at the beginning of the year. It is also likely that its provisions will be very supportive of consumption and growth,” he added. “This contingency is in addition to the existing signs of accumulated demand from American consumers.”
But while the S&P 500 hit a new closing record, the Nasdaq Composite posted its best gain that day, with a 2.5% rise on the back of the pivot back in popular tech stocks. Movements that carried that higher index included a 4.7% increase in Tesla and gains of at least 3% in Apple, Facebook, Alphabet and Netflix.
Nasdaq is out of the way of a 10% correction it suffered earlier this month and remains 5.48% below its own record set in February.
A rapid rise in bond yields put pressure on the strong technology index in early March, while investors turned to economically sensitive cyclical stocks. The sharp rise in interest rates can put undue pressure on high-growth technology stocks, as they reduce the relative value of future profits.
This trend appears to have partially reversed on Thursday as bond yields calmed; Nasdaq has risen 3.7% so far this week and outperforms both the S&P 500 and the Dow. The 10-year Treasury yield, which peaked at around 1.6% this month, was last seen north of 1.53%.
Signs that the US economy could be set for a healthy year in 2021 abounded on Thursday after Biden signed his long-awaited $ 1.9 trillion package to save the coronavirus. The plan will send direct payments of up to $ 1,400 to many Americans and will also put nearly $ 20 billion in vaccinations against Covid-19 and $ 350 billion in state, local and tribal government aid.
Biden announced on Thursday night that he would direct states to make all adults eligible for the vaccine by May 1, in his first speech by the prime minister as president.
Investors also cheered a slightly better-than-expected reading on weekly unemployment claims, which showed a decline in the number of first-time unemployment benefits.