Stock futures advanced on Thursday, indicating that shares of giant tech companies would rise higher at the opening bell as investors waited for a new reading on the labor market.
Futures linked to the S&P 500 were up 0.7%. Contracts linked to the Nasdaq-100 rose 1.9%, suggesting that technology stocks will rebound after moderate falls in the sector on Wednesday. Dow Jones Industrial Average futures rose 0.3%, a day after the blue-chip index closed at an all-time high.
Investor demand for stocks has revived as bond markets have calmed down. The yield on the 10-year Treasury notes, which moves inversely to price, fell to 1.502% from 1.520% on Wednesday, putting it on course for the third day in a row of declines. Yields rose as high as 1.594% earlier this week.
Stocks have been hit by strong moves in bond yields, fueled by uncertainty about how the $ 1.9 trillion relief bill passed by the House on Wednesday will affect the US economy.
Concerns that the size of the stimulus would push inflation beyond the Federal Reserve’s comfort zone and trigger a rise in interest rates sent yields higher recently. That sapped appetite for stocks in tech companies, which had benefited from a prolonged period of low interest rates. At the same time, optimism about the economic outlook has bolstered demand for shares of companies that would benefit from loosening locks.
Moderate inflation data for the beginning of the year has calmed nerves over the rate outlook. But bond yields will likely remain volatile, shifting momentum between different segments of the stock market, said Monica Defend, head of research at French asset manager Amundi.
“Over time, it should be positive for the stock market if we have a little more inflation, a little more growth,” he said.
Tech stocks, including Apple, Twitter and data mining company Palantir Technologies, rose ahead of the bell in New York. Oracle fell 4.5% after the software giant reported earnings Wednesday night.
Shares of video game retailer and online trading sensation GameStop fell about 9% before commercialization. Volatility has returned in recent sessions to the so-called meme stocks that are the favorites of individual investors who gather in internet forums.
Data on the number of people filing for unemployment benefits, an indicator of unemployment, will be released at 8:30 am ET. Economists polled by The Wall Street Journal expect that 725,000 workers applied for initial benefits last week. That would mark a small decrease from the previous week and offer a further sign of improvement in the job market following a decline in Covid-19 case numbers.
“We’re not completely out of the woods yet in terms of the unemployment rate,” said Mary Nicola, a portfolio manager at PineBridge Investments. The health of the labor market will be a key determinant of when the Fed decides to raise interest rates, he added.
Investor appetite for US government debt will receive another test Thursday with the planned auction of $ 24 billion in 30-year bonds. The Treasury sold $ 58 billion in three-year notes on Tuesday and $ 38 billion in 10-year notes on Wednesday.
In foreign markets, the Stoxx Europe 600 was up 0.3%.
The euro rose 0.3% to $ 1.1964 ahead of the European Central Bank’s latest monetary policy decision, scheduled for 7:45 am ET. Investors expect ECB President Christine Lagarde to address the recent surge in bond yields in the region at the subsequent press conference. The bank will also publish its quarterly economic forecasts for the eurozone.
“The eurozone cannot afford a tightening of financial conditions and we have been importing it from higher rates in the United States,” Ms Defend said. “It is something that the ECB considers a cause for concern.”
China’s Shanghai Composite Index rose 2.4% in its biggest one-day rise since October. The advance followed an article in a financial newspaper encouraging new investors to seek long-term returns and not get carried away by volatility in stocks, Deutsche Bank strategist Jim Reid said in a note.
Markets were up in other parts of Asia, with Japan’s Nikkei 225 and South Korea’s Kospi gaining 0.6% and 1.9% at the close, respectively.
Write to Joe Wallace at [email protected]
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