This post was originally published on this site
U.S. stock-index futures rose modestly early Wednesday as lawmakers in Washington held out hope for a deal on another round of financial aid to combat the economic impact of the coronavirus pandemic and as investors awaited a new round of guidance from the Federal Reserve.
What are major benchmarks doing?
- Futures on the Dow Jones Industrial Average YM00, +0.06% rose 41 points, or 0.1%, to 30,155.
- S&P 500 futures ES00, +0.18% were up 7 points, or 0.2%, at 3,694.
- Nasdaq-100 futures NQ00, +0.26% edged up 15 points, or 0.1%, to 12,611.
Stocks ended broadly higher Tuesday, with the Nasdaq Composite closing at a record.
- The Dow DJIA, +1.13% advanced 337.76 points, or 1.1%, to finish at 30,199.31.
- The S&P 500 SPX, +1.29% rose 47.13 points, or 1.3%, ending at 3,694.62.
- The Nasdaq Composite COMP, +1.25% closed at 12,595.06, a gain of 155.02 points, or 1.2%.
What’s driving the market?
Optimism continued to run high over prospects for another fiscal relief package after top lawmakers from both parties met face-to-face late Tuesday, though the negotiations showed few clear signs of progress.
“Stimulus remains a key focus for the market, as it is the necessary bridge to expansive vaccinations,” said Lindsey Bell, chief investment strategist for Ally Invest, in a note.
“Market participants would like to see a deal sooner rather than later given the expectation for economic data to slow near-term. In the absence of a deal, turbulence could pick up,” she said.
See: Americans stick near home again due to coronavirus resurgence in fresh blow to the economy
Katie Stockton, a market technician and founder of Fairlead Strategies, thinks the rotation that began in earnest in November is a strong signal of a health market. “From an intermediate and long-term perspective, it’s bullish,” she told MarketWatch, ” reflective of a strong uptrend on the back of an important market low.
While Stockton expects a short-term pullback in January, in the near term “there are positive seasonal influences,” she said. Momentum has been faltering, but “a day like Tuesday shows market resiliency.”
Investors may rotate into defensive plays like consumer staples XLP, +0.24% as part of the January drawdown Stockton expects. “We’re looking for the uptrend to resume on the back of that, so be buyers of that weakness,” she said.
Investors have focused on the rollout of a COVID-19 vaccine developed by Pfizer Inc. PFE, -1.28% and BioNTech SE BNTX, +2.71% and rapid progress toward other vaccines, which comes as the pandemic has intensified.
The U.S. saw 201,649 new cases on Tuesday, and at least 2,957 new deaths, according to a New York Times tracker. The U.S. has averaged 206,557 cases per day over the past week, a 28% increase from the average two weeks earlier. There were 112,816 COVID-19 patients in U.S. hospitals on Tuesday, according to the COVID Tracking Project, setting a daily record for the 10th straight day.
The Fed is likely to take center stage later Wednesday, though no significant changes to policy are expected from its meeting. Investors will be looking for any additional guidance on the central bank’s asset-buying program and will parse the latest round of economic forecasts.
The policy-making Federal Open Market Committee is due to issue a statement at 2 p.m. Eastern, followed by Powell’s news conference at 2:30 p.m.
See: 4 things to watch for when the Fed meets Wednesday
It’s also a busy day for U.S. economic data. November retail sales figures showed a 1.1% slide during the month, dwarfing the 0.4% decline forecast by economists surveyed by MarketWatch.
Purchasing managers index readings from IHS Market are set for release at 8:45 a.m. ET, while data on October business inventories and a December reading for a home builders’ index are scheduled for 10 a.m. ET.
Which companies are in focus?
- Shares of Quest Diagnostics Inc. DGX, +1.09% were higher in premarket action, after the clinical lab testing company raised its full-year profit, revenue and cash flow outlook, citing “significantly higher” COVID-19 molecular testing volumes compared with what was expected in late October.
- Southwest Airlines Co. LUV, +2.56% shares fell in premarket action after the air carrier said November load factor came in below previous expectations and raised its fourth-quarter estimate for average daily cash burn.
- Shares of Tilray Inc. TLRY, +6.78% surged 30.8% in premarket trading and Aphria Inc.’s U.S.-listed stock APHA, +3.05% was up 10% after the two cannabis companies announced a merger,
What are other markets doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.946% rose nearly 1 basis point to 0.923%.
The ICE U.S. Dollar Index DXY, -0.26% a measure of the currency against a basket of six major rivals, was off 0.3% to 90.23.
The pan-European Stoxx 600 Europe index SXXP, +0.71% and London’s FTSE 100 benchmark UKX, +0.60% were both trading 0.9% higher.
Oil futures were down fractionally one day after settling at a more than nine-month high, with the U.S. benchmark CL.1, -0.02% trading near $47.60 a barrel.
Gold futures GCG21, +0.15% for February were up 0.3%, near $1,861.40 an ounce.
