US futures rose on Wednesday with optimism that the launch of Covid-19 vaccines and progress towards an agreement on a new fiscal stimulus bill bodes well for the economic recovery.
S&P 500 futures rose 0.5%, while Dow Jones Industrial Media futures gained 0.7%, suggesting both benchmarks will advance after the opening bell in New York. Contracts on the Nasdaq-100 index rose 0.5%, indicating gains for technology stocks a day after investors withdrew funds from the sector, sending broader measurements down.
Shares have been nervous in recent days, with major indices fluctuating daily between losses and gains.
On Wednesday, sentiment was fueled by signals that Democrats will try to close the gap on unemployment benefits and other issues as they aim to complete a $ 1.9 trillion aid package in the coming days. Mr Biden also said the US would have enough Covid-19 vaccines for all American adults by the end of May, two months earlier than previously said.
“The launch of the vaccine 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 fiscal stimulus in the background and leading many people to update their US growth expectations.”
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, Eaton Vance’s director of global equities. This includes bank and energy stocks, which outperform the technology sector this year.
“We can see light at the end of the pandemic tunnel,” Mr Dyer said. “Progress in vaccinations has led to confidence in the economic recovery, and you have seen that companies heading for this economic recovery are doing well in recent months.”
The bond market has calmed down in recent days, after an increase in yields that shook investors, leading to sharp declines in shares. The yield on the 10-year US Treasury bond rose to 1.449% from 1.413% on Tuesday. It is still down from 1.513% last month.
Top central bank officials said rising yields reflected optimism about the economic outlook. Federal Reserve Governor Lael Brainard said Tuesday that the recent riot in the bond market is on the radar screen. She noted that the Federal Reserve will not return support for the economy until it is on a stronger footing, reiterating comments made by other officials.
“The Fed has strongly indicated that they are willing to be patient, but also [that] Rising yields are an indication of strong growth, so this is a good environment for stocks to thrive, ”said Ms Shah.
Prior to the market opening, Lyft grew by almost 5% after the vehicle company revealed strong figures in late March. Uber’s competitor also grew by 3%.
Investors are waiting for data on the activity in the services sector from the Institute for Supply Management, which will be launched at 10 am ET. The figures are expected to show that sector activity has expanded for the ninth consecutive month in February.
The Fed’s beige book report, which will take place at 2 p.m. ET, will provide the latest collection of business anecdotes, providing information on how companies are preparing to reopen the economy.
In commodity markets, Brent crude, the international benchmark for oil, rose 1.5 percent to $ 63.63 a barrel. Gold prices fell by 0.7%.
Abroad, mainland Stoxx Europa 600 rose 0.4%.
Most major Asian indices gained at the end of trading. China’s Shanghai Composite Index rose nearly 2%, while in Hong Kong, Hang Seng rose 2.7%. The Japanese Nikkei 225 rose 0.5% and Kospi in South Korea rose 1.3%.
Traders are working on the floor of the New York Stock Exchange on Tuesday.
Photo:
Colin Ziemer / Associated Press
Write to Will Horner to [email protected]
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