Stock futures just after rally on Wall Street, Fed in focus

US equity futures held steady during overnight trading on Tuesday, as investors clung to the possibility of new fiscal stimulus before the end of the year.

Market participants are also watching the Federal Reserve’s comments on the future of the US economy on Wednesday.

Dow futures were down 11 points. S&P 500 futures and Nasdaq 100 futures fell 0.06% and 0.05%, respectively.

On Tuesday, the highest average recorded a series of multi-day negative sessions, with all three indices closing with a profit. The Dow Jones Industrial Average climbed nearly 340 points, aided by a 5% rise in Apple shares. The S&P 500 climbed 1.3%, breaking a 4-day loss streak.

The Nasdaq Composite ended the day up 1.25% on a new record. The Russell 2000 small cap index closed 2.4% higher on a new record close.

Investors applauded developments in Washington regarding a stimulus package to help sick Americans deal with the economic fallout from the Covid-19 pandemic.

House Speaker Nancy Pelosi invited congressional leaders, including Senate Majority Mitch McConnell, to discuss government funding and the aid package. On Monday, a bipartisan group of lawmakers released a proposal for another round of economic aid on Monday evening.

The first plan calls for $ 748 billion in spending on programs beloved by both Republicans and Democrats, including federal unemployment benefits and additional loans under the Paycheck Protection Program. A second $ 160 billion bill would cover the more controversial areas of corporate liability protections and financial aid to state and local governments.

“Stimulus remains a key focus for the market as it represents the necessary bridge to comprehensive vaccinations,” Lindsey Bell, Chief Investment Strategist at Ally Invest told clients. “Market participants would want to see a deal sooner rather than later, given the expectation that economic data will slow down in the near term. If there is no deal, the turbulence could pick up.”

The deadline for stimulus measures looms amid some of the darkest days of the pandemic. The US records at least 215,400 new Covid-19 cases and at least 2,300 virus-related deaths every day, based on a seven-day average calculated by CNBC based on data from Johns Hopkins University.

The rollout of the Pfizer Covid-19 vaccine continued in the US on Tuesday.

The Federal Reserve will publish its statement on the course of monetary policy on Wednesday afternoon. While the Fed’s long-term outlook is expected to be enhanced by the vaccine, the central bank is expected to sound very subdued at the end of its meeting.

The bond market can have a volatile response, depending on what the Fed signals about the bond buying program.

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