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U.S. stock index futures were little changed on Tuesday, after a session that saw stocks alternate between gains and losses.
Futures contracts linked to the Dow Jones Industrial Average slipped 20 points. The S&P 500 and Nasdaq 100 futures contracts each fell 0.09%.
Closed stocks were little changed on Tuesday as traders digested higher rates, possible additional stimulus and political unrest.
The Dow Jones Industrial Average rose 60 points, or 0.2%, to 31,068.69. The Nasdaq Composite ended the day up 0.3% and the S&P 500 edged up to 3,801.19. Meanwhile, the benchmark 10-year Treasury yield briefly traded at 1.18%, its highest level since March.
In view of the rise, Credit Suisse advised investors to focus on pro-cyclical sectors, particularly finance and energy. However, the rate hike could hurt growth stocks and a number of tech heavyweights, including Facebook and Apple, pulled back during Tuesday’s session.
Expectations of further fiscal stimulus are one reason for the steady rise in yields. President-elect Joe Biden is expected to release details of his economic plan on Thursday.
“At a minimum, even a $ 500 billion budget package including additional stimulus checks, extended unemployment benefits and funding for health and vaccine spending will be another boost to economic growth in 2021,” he said. said Jason Draho, head of UBS Global Wealth Management for Americas asset allocation.
After Tuesday’s muted session, the main averages remain lower for the week following Monday’s slide. The Nasdaq Composite is the relative underperformance, down around 1% in the past two sessions. Small caps are a bright spot though and the Russell 2000 Index is up 1.7% so far this week.
The moves come as unrest in Washington continues. The Democrat-held House will vote Tuesday night on a resolution calling on Vice President Mike Pence and the Cabinet to invoke the 25th Amendment to kick Trump out of the White House.
Covid cases also continue to increase in the United States and abroad. The United States records at least 248,650 new cases of Covid-19 and at least 3,223 virus-related deaths each day, based on a seven-day average calculated by CNBC using data from Johns Hopkins University .
Still, many say the United States is set to return to growth later this year.
“In 2021, the US economy is expected to experience strong favorable winds from additional fiscal and monetary stimulus associated with the end of the impact of the pandemic on the economy,” said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. “The pent-up demand in industries affected by COVID-19 … and a necessary restocking is expected to further stimulate job growth,” he added.
Taken together, Schutte said this paves the way for above-average economic growth and he sees stocks soar to new highs.
– CNBC’s Jacob Pramuk contributed reporting.
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