U.S. stock futures rose Wednesday on optimism that the rollout of Covid-19 vaccines and progress toward a deal on a new fiscal-stimulus bill augur well for the economic rebound.
Futures tied to the S&P 500 climbed 0.5% while Dow Jones Industrial Average futures gained 0.6%, suggesting that both benchmarks will advance after the New York opening bell. Contracts on the Nasdaq-100 Index gained 0.6%, pointing to gains for technology stocks a day after investors pulled funds from the sector, sending broader gauges down.
Stocks have been jittery in recent days, with the major indexes wavering daily between losses and gains. On Wednesday, sentiment was buoyed by signals that Democrats will seek to bridge differences over jobless benefits and other issues as they aim to complete a $1.9 trillion relief package in coming days. Mr. Biden also said the U.S. would have enough Covid-19 vaccines for all American adults by the end of May, two months earlier than he had previously said.
“The vaccine rollout 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 it is leading many people to upgrade their U.S. growth expectations.”
Optimism about the better economic prospects is particularly fueling demand for shares in companies that would benefit when the economy returns to normal, said Chris Dyer, director of global equities at Eaton Vance. That includes banking and energy stocks, which are outperforming the technology sector this year.
“We can see light at the end of the tunnel of the pandemic,” Mr. Dyer said. “The progress that has been made on vaccinations has led to confidence in the economic recovery and you have seen companies geared into that economic recovery do well in the last months.”
The bond market has also calmed in recent days after a surge in yields rattled investors, leading to sharp declines in stocks. The yield on the 10-year U.S. Treasury bond ticked up to 1.446%, from 1.413% on Tuesday. That is still down from the 1.513% it hit last month.
Top central bank officials have said the rise in yields reflect optimism about economic prospects.
Federal Reserve Gov. Lael Brainard
said Tuesday that the recent tumult in the bond market is on her radar screen. She signaled that the Federal Reserve won’t dial back support for the economy until it is on a stronger footing, reiterating comments made by other officials.
“The Fed has indicated very strongly that they are willing to be patient, but also [that] the rising yields are an indication of strong growth, so that is a good environment for equities to be in,” Mrs. Shah said.
Ahead of the market opening,
Lyft
rose over 3% after the ride-sharing company disclosed strong February ride figures late Tuesday. Competitor Uber also rose over 3%.
Investors are awaiting data on activity in the services sector from the Institute for Supply Management, due at 10 a.m. ET. The figures are expected to show that sectorwide activity expanded for a ninth consecutive month in February.
The Fed’s beige book report, due at 2 p.m. ET, will offer the latest collection of business anecdotes, offering insights into how companies are gearing up for the reopening of the economy.
In commodity markets, Brent crude, the international benchmark for oil, rose 1.9% to $63.90 a barrel. Gold prices fell 0.6%.
Overseas, the pan-continental Stoxx Europe 600 rose 0.4%.
Most major Asian indexes gained by the close of trading. China’s Shanghai Composite Index rose almost 2%, while in Hong Kong, the Hang Seng jumped 2.7%. Japan’s Nikkei 225 edged up 0.5%, and South Korea’s Kospi rose 1.3%.
Traders work on the floor of the New York Stock Exchange on Tuesday.
Photo:
Colin Ziemer/Associated Press
Write to Will Horner at [email protected]
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