US futures rose on Friday, indicating that the S&P 500 is ready for its best week in three months, on investors’ commitment that a new coronavirus relief spending package will strengthen the economy.
Futures linked to the S&P 500 climbed 0.5%, indicating that the broad market meter may rise after closing at a record high on Thursday. The benchmark is up more than 4% this week, on track for its biggest one-week gain since the week ending November 6.
Contracts linked to the technology-heavy Nasdaq-100 rose 0.4%, and contracts linked to the Dow Jones industrial average rose 0.5% higher.
The market rose this week as President Biden continued its efforts to pass a $ 1.9 billion relief package. Democrats use a special procedure to proceed with the stimulus bill: The Senate on Friday approved a budget plan that promotes the reconciliation process needed to get the aid plan approved by a simple majority in the Senate.
Many investors see fresh spending as crucial to weakening the economy, with coronavirus cases still high in parts of the US.
“It will be a big boost for the economy.” says Edward Smith, head of asset allocation research at Rathbone Investment Management. “It certainly reduces any short-term risk as we wait for the vaccine to roll out completely.”
Economists expect U.S. employers to add 50,000 jobs last month.
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Joe Raedle / Getty Images
The U.S. jobs report for January, which will appear at 8:30 a.m. ET, will show whether the economy is starting to slow down in the winter. According to economists, employers will have added 50,000 jobs last month. Wage states fell for the first time in December since the pandemic came to a halt last spring. The unemployment rate is expected to remain at 6.7%.
Investors also remain focused on the deployment of Covid-19 vaccines, which could accelerate the pace of economic recovery. Johnson & Johnson on Thursday asked U.S. regulators to authorize the state of emergency of its single-shot Covid-19 vaccine, which would set the scene for a possible third vaccine to be available in the U.S. within weeks.
“The more vaccines are rolled out, the more people will start moving,” said Gregory Perdon, co-investment officer at private bank Arbuthnot Latham..
Shares of Johnson & Johnson rose more than 2% to market.
The volatility in markets also declined this week, after rising to its highest level since the end of October at the end of January. The rise comes as individual investors in online forums injected money into a handful of stocks, leading to insane trading and sharp price increases. The Cboe Volatility Index, a measure of turmoil in the broader U.S. stock market, fell to less than 22 on Friday, from more than 37 last week.
Those heavily traded stocks have since lost steam, with GameStop shaking off nearly 84% of its value so far this week, while AMC Entertainment Holdings fell 46%.
The popular trading app Robinhood Markets has removed the last of its trading restrictions on shares of both companies, according to its website. GameStop rose 4% in pre-trading, while AMC rose almost 3%.
On bond markets, yields on the 10-year treasury note rose to 1.162%, near its highest closing level since March 2020, from 1.140% on Thursday. Yields fall when prices rise.
Overseas, the pan-continental Stoxx Europe 600 rose 0.4%. The shares of French bank BNP Paribas rose more than 3% after reporting a smaller profit than decline.
In Asia, most important benchmarks advanced by the end of trade. The Japanese Nikkei 225 rose 1.5%, and the South Korean Kospi index closed 1.1% higher. Hang Seng in Hong Kong rose 0.6%. China’s Shanghai composition rose 0.2% lower.
Write to Caitlin Ostroff by [email protected]
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