US stock futures rallied Friday, suggesting the S&P 500 is poised for its best week in three months, based on investors’ bets that a new coronavirus spending package will bolster the economy.
Futures pegged to the S&P 500 climbed 0.5%, indicating that the broad market meter may continue to rise after closing at a record high on Thursday. The benchmark is up more than 4% this week, on track for its biggest one-week gain since the week ending Nov. 6.
Contracts pegged to the tech-heavy Nasdaq-100 were up 0.4%, and those pegged to the Dow Jones Industrial Average were up 0.5%.
The market rebounded this week as President Biden continued efforts to approve a $ 1.9 trillion aid package. Democrats are using a special procedure to advance the stimulus bill: the Senate approved a budget plan on Friday that promotes the reconciliation process needed to get the aid plan approved by a simple majority in the Senate.
The new spending is seen by many investors as critical to sustaining the economy, with coronavirus cases still high in parts of the US.
“That would be a huge boost to the economy.” said Edward Smith, head of asset allocation research at Rathbone Investment Management. “It will certainly reduce any short-term risk while we wait for the vaccine rollout to get underway.”
Economists expect US employers to add 50,000 jobs last month.
Photo:
Joe Raedle / Getty Images
The US jobs report for January, due at 8:30 a.m. ET, will show if the economy is recovering from a winter slowdown. According to economists, employers will have added 50,000 jobs last month. Payroll fell in December for the first time since the pandemic came to a halt last spring. The unemployment rate is expected to remain stable at 6.7%.
Investors also remain focused on the rollout of Covid-19 vaccines, which could accelerate the speed of the economic recovery. Johnson & Johnson asked US regulators Thursday to approve the emergency use of the one-time vaccine Covid-19, paving the way for a potential third vaccine to be available in the US within weeks.
“The more vaccines that are rolled out, the more people will move,” said Gregory Perdon, co-chief investment officer at private bank Arbuthnot Latham..
Johnson & Johnson shares rose for the market by more than 2%.
Market volatility has also eased this week, after rising to its highest level since late October in late January. The peak came when individual investors injected money into a handful of stocks on online forums, leading to frenzied trading and sharp price increases. The Cboe Volatility Index, a gauge of turbulence in the broader US stock market, fell below 22 on Friday, from more than 37 last week.
Those heavily traded stocks have since lost their strength, with GameStop losing nearly 84% of its value this week, while AMC Entertainment Holdings fell 46%.
Popular trading app Robinhood Markets has removed the latest trading limit on stocks of both companies, according to its website. GameStop was up more than 4% in premarket trading, while AMC gained nearly 3%.
In bond markets, the yield on the 10-year Treasury tipped to 1.162%, close to its highest close since March 2020, of 1.140% Thursday. Revenues fall when prices rise.
Overseas, the pan-continental Stoxx Europe 600 rose by 0.4%. Shares of French bank BNP Paribas rose more than 3% after reporting a less-than-expected earnings decline.
In Asia, most of the major benchmarks advanced towards the end of trading. Japan’s Nikkei 225 gained 1.5% and South Korea’s Kospi index closed 1.1% higher. Hang Seng in Hong Kong rose 0.6%. China’s Shanghai Composite fell 0.2% lower.
Write to Caitlin Ostroff at [email protected]
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