Traders work on the floor of the New York Stock Exchange.
NYSE
US stock futures skyrocketed Sunday night as a new stimulus package from Washington headed for the final passage this week.
Futures contracts linked to the Dow Jones Industrial Average were up 219 points, or 0.7%. Those for the S&P 500 and Nasdaq 100 composite gained 0.5% and 0.6%, respectively.
The move into the future came after the Senate passed a $ 1.9 trillion economic relief and stimulus bill on Saturday that paved the way for unemployment benefit expansions, another round of stimulus controls, and aid to state and local governments. The Democratic-controlled House is expected to pass the bill later this week. President Joe Biden is expected to sign it into law before unemployment assistance programs expire on March 14.
The new round of government spending could lead to ripples in the US Treasury market, where the benchmark 10-year return has risen sharply in recent weeks. The yield rose to 1.62% on Friday after the start of the calendar year below the 1% mark.
The rapid movement in the highlighted bonds has also made equity investors nervous, contributing to the weakness of stocks with high valuations.
Futures contracts pegged to the 10-year Treasury price fell 0.2% on Sunday evening at the opening of the trade, implying higher interest rates.
“Ten-year yields finally caught up to other asset markets. This is putting pressure on valuations, especially for the most expensive stocks that had a nosebleed,” said Mike Wilson, chief US equity strategist at Morgan Stanley.
The stock market comes off an afternoon rally on Friday that took some of the sting out of a tough week for high-flying moment names. The tech-heavy Nasdaq finished down 2.1% in the week so far, while the S&P 500 gained 0.8%. The Dow, which relies more on cyclical stocks, rose 1.8%.
Friday’s turnaround does not indicate that the recent weakness for the market is over, but the divergence between technical and cyclical actions shows that the bullish story remains intact, Morgan Stanley’s Wilson said.
“The bull market remains under the hood, with value and cyclicals leading the way. Growth stocks can rejoin the party once the valuation correction and repositioning are complete,” said Wilson.
On the economic front, investors will be taking a look at wholesale stock data from January on Monday. Several economic measures in recent weeks have shown a recovery that is gaining momentum, including a better-than-expected February jobs report released Friday.