U.S. stock futures rose on Wednesday on optimism that the introduction of Covid-19 vaccines and progress toward an agreement with a new fiscal stimulus bill will have a positive effect on economic recovery.
Futures linked to the S&P 500 rose 0.5%, while the Dow Jones Industrial Average rose 0.7%, indicating that both benchmarks will rise after the opening clock in New York. Contracts over the Nasdaq 100 index rose 0.5%, indicating gains for technology stocks a day after investors withdrew funds from the sector, dropping broader measurements.
Stocks have been volatile over the past few days, with key indices fluctuating daily between losses and gains.
On Wednesday, sentiment was aroused by signals that Democrats want to bridge the gap on unemployment benefits and other issues as they seek to complete a $ 1.9 billion relief package in the coming days. Mr. Biden also said the U.S. would have enough Covid-19 vaccines for all U.S. adults by the end of May, two months earlier than he had previously said.
“The rollout of vaccines is going very well compared to many expectations,” said Seema Shah, chief strategist at Principal Global Investors. “And at a time when the economy seems to be recovering on its own, we also have the prospect of fiscal stimulus in the background, and this is leading many people to improve their US growth expectations.”
Optimism about the better economic outlook especially stimulates the demand for shares in companies that will benefit if the economy returns to normal, said Chris Dyer, director of global equities at Eaton Vance. This includes banking and energy supplies, which are outperforming the technology sector this year.
“We can see light at the end of the tunnel of the pandemic,” said Mr. Dyer said. “The progress made with vaccinations has led to confidence in the economic recovery, and you have seen that companies that are focused on doing economic recovery have been doing well in recent months.”
The bond market has also calmed over the past few days after a rate of return hit investors, leading to a sharp decline in equities. Yields on the U.S. Treasury bond for ten years rose to 1,449%, from 1,413% on Tuesday. It is still lower than the 1,513% he achieved last month.
The central bank’s top officials said the rise in yields reflected optimism about economic prospects. Federal Reserve Governor Lael Brainard said Tuesday the recent upheaval in the securities market is on her radar screen. She indicated that the Federal Reserve would not reverse support for the economy until it was stronger, and reiterated the comments of other officials.
“The Fed has indicated very strongly that they are prepared to be patient, but also [that] the rising returns are an indication of strong growth, so it is a good environment for equities, ”said Ms. Shah said.
Before the opening of the market, Lyft rose almost 5% after the joint venture announced strong figures for February late Tuesday. Rival Uber also rose 3%.
Investors are waiting for data on activities in the service sector of the Institute of Supply Management, which will be held at 10:00 am. The figures are expected to show that sector-wide activity has expanded for a ninth consecutive month.
The Fed’s beige book report, available at 14:00 ET, provides the latest collection of business anecdotes, providing insight into how companies are preparing for the reopening of the economy.
In commodity markets, Brent crude, the international benchmark for oil, rose 1.5% to $ 63.63 a barrel. Gold prices fell by 0.7%.
Overseas, the pan-continental Stoxx Europe 600 rose 0.4%.
Most major Asian indices were acquired by the end of the trade. The Chinese Shanghai Composite Index rose nearly 2%, while Hang Seng rose 2.7% in Hong Kong. The Japanese Nikkei 225 rose by 0.5%, and the South Korean Kospi by 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 by [email protected]
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