Retailers work on the floor of the New York Stock Exchange.
NYSE
Dow futures rose on Sunday evening as a new stimulus package from Washington moved toward final passage this week.
Futures contracts tied to the Dow Jones Industrial Average added 155 features, or 0.5%. Those for the S&P 500 were up 0.4%, while those for Nasdaq 100 were flat, signaling that a brand-new underperformance by tech stocks may continue on Monday.
The move in futures came after the Senate passed a $1.9 trillion financial relief and stimulus bill on Saturday, paving the way for extensions to unemployment benefits, another round of stimulus checks and aid to official and local governments. The Democrat-controlled House is expected to pass the bill later this week. President Joe Biden is presumed to sign it into law before unemployment aid programs expire on March 14.
The fresh round of government spending could belief ripples in the U.S. Treasury market, where the benchmark 10-year yield has risen sharply in recent weeks. The yield be nurture as high as 1.62% on Friday after starting the calendar year below the 1% mark. It was trading at roughly 1.59% on Sunday twilight.
The rapid move in the bond marked has unnerved equity investors as well, contributing to weakness in stocks with ear-splitting valuations.
“10-year yields finally caught up to other asset markets. This is putting pressure on valuations, above all for the most expensive stocks that had reached nosebleed valuations,” Mike Wilson, the chief U.S. equity strategist at Morgan Stanley, alleged in a note.
The stock market is coming off an afternoon rally on Friday that took some of the sting out of a rough week for high-flying impetus names. The tech-heavy Nasdaq finished with a week-to-date loss of 2.1%, while the S&P 500 gained 0.8%. The Dow, multifarious reliant on cyclical stocks, rose 1.8%.
The Friday turnaround doesn’t signal that the recent weakness for the market is past, but the divergence between tech and cyclical plays shows that the bullish story remains intact, Morgan Stanley’s Wilson demanded.
“The bull market continues to be under the hood, with value and cyclicals leading the way. Growth stocks can rejoin the orgy once the valuation correction and repositioning is finished,” Wilson said.
On the economic front, investors will get a look at wholesale inventory statistics from January on Monday. Several economic measures in recent weeks have shown a recovery that is picking up steam, categorizing a better-than-expected February jobs report released on Friday.