Traders work on the floor of the New York Stock Exchange.
US stock index futures advanced during overnight trading after major averages ended Tuesday’s session in the red.
Futures contracts tied to the Dow Jones Industrial Average gained 27 points. S&P 500 futures were up 0.1%, while Nasdaq 100 futures were up 0.16%.
Major averages retreated from all-time highs to close in negative territory during regular trading. The Dow fell 97 points, or 0.3%, snapping a two-day winning streak. The S&P hit an all-time high, but fell back during afternoon trading and eventually closed down 0.1% in its first negative session in four. The Nasdaq Composite fell 0.05%, also breaking a three-day winning streak.
“There are many reasons to be excited about the months ahead, and overall we are optimistic for this year,” said Lindsey Bell, chief investment strategist at Ally Invest. “Equity momentum is strong, there’s no question about that. But the market may be ready to take a breather as investors take in all the good news, determine how much of that is traded, and compare it to uncertain risks like inflation.” added. .
Strong economic data, including the March employment report that easily beat expectations, has fueled stocks soaring in recent sessions. The top three averages come off their fourth consecutive quarter of earnings as the economic recovery from Covid-19 accelerates.
The International Monetary Fund on Tuesday raised its growth outlook for the world economy for 2021 to 6%, above the January forecast of 5.5%. The organization said that “a way out of this health and economic crisis is increasingly visible.” However, the IMF warned of “daunting challenges” given the varied pace of vaccine launches around the world.
“From a positioning standpoint, we still see stocks as relatively attractive,” said Keith Lerner, Truist’s chief market strategist. “Although we expect periodic pullbacks, US stocks have risen 85% of the time during economic expansions and valuations remain attractive relative to bonds.”
Rising returns have spooked investors recently, causing growth to shift into value-oriented areas of the market. On Tuesday, the 10-year Treasury yield fell 7 basis points to 1.65%.
The Federal Open Market Committee will publish the minutes of its March meeting, where the central bank chose to leave interest rates unchanged, on Wednesday. The minutes could offer investors a clue as to when the Fed could raise interest rates.