Rise in vaccine futures, hopes of stimulus

Stocks have been nervous over the past few days, with the major indexes swinging between losses and gains on a daily basis.

Sentiment was bolstered on Wednesday by signals that Democrats will seek to close differences on unemployment benefits and other issues as they aim to complete a $ 1.9 trillion relief package in the next few months. days. Mr Biden also said the United States will have enough Covid-19 vaccines for all American adults by the end of May, two months earlier than he previously said.

“The vaccine rollout is going extremely well against many expectations,” said Seema Shah, chief strategist at Principal Global Investors. “And at a time when it looks like the economy could recover on its own, we also have the prospect of a fiscal stimulus in the background, and that’s leading many people to revise their expectations upward. growth in the United States. ”

Optimism about the better economic outlook is particularly fueling demand for stocks from companies that would benefit when the economy returns to normal, said Chris Dyer, director of global equities at Eaton Vance. This includes banking and energy stocks, which outperform the tech sector this year.

“We can see the light at the end of the pandemic tunnel,” Dyer said. “Advances in vaccinations have led to confidence in the economic recovery and you have seen companies focused on this economic recovery do well in recent months.”

The bond market has also calmed down in recent days after a surge in yields that rocked investors, causing stocks to fall sharply. The yield on the 10-year US Treasury bill climbed to 1.449%, from 1.413% on Tuesday. This is still down from the 1.513% reached last month.

Senior central bank officials said the rise in yields reflected optimism about the economic outlook. Federal Reserve Governor Lael Brainard said on Tuesday the recent bond market uproar was on her radar screen. She signaled that the Federal Reserve will not recompose its support for the economy until it is on a more solid footing, reiterating comments from other officials.

“The Fed has indicated very strongly that it is ready to be patient, but also [that] rising yields indicate strong growth, so it’s a good environment for stocks, ”said Ms. Shah.

Before the market opened, Lyft was up nearly 5% after the rideshare company disclosed solid numbers in February on Tuesday night. Competitor Uber also rose 3%.

Investors are awaiting data on activity in the services sector from the Institute for Supply Management, due at 10 a.m. ET. The figures should show that sector activity increased for a ninth consecutive month in February.

The Fed’s Beige Book report, due at 2 p.m. ET, will offer the latest collection of business anecdotes, offering insight into how businesses are preparing for the economy to reopen.

In commodities markets, Brent, the international benchmark for oil, rose 1.5% to $ 63.63 per barrel. Gold prices fell 0.7%.

Overseas, the pan-continental Stoxx Europe 600 index rose 0.4%.

Most of the major Asian indices gained at the close of trading. The Shanghai Composite Index in China rose nearly 2%, while in Hong Kong, the Hang Seng Index jumped 2.7%. Japan’s Nikkei 225 rose 0.5% and South Korea’s Kospi rose 1.3%.

Write to Will Horner at [email protected]