Stock Futures Rise After Dow’s Record

Stock futures held on to gains after data showed 712,000 initial unemployment benefit claims were filed last week, slightly below economists’ estimates. That number, an indicator of unemployment, marked a drop of 42,000 from the previous week, offering another sign of improvement in the labor market following an easing in the number of Covid-19 cases.

Investor demand for stocks rebounded as bond markets calmed down. The yield on 10-year Treasuries, which moves inversely to price, slipped to 1.507% from 1.520% on Wednesday, putting it on track for a third consecutive day of decline. Yields climbed to 1.594% earlier this week.

Stocks were rocked by sharp swings in bond yields, fueled by uncertainty over how the $ 1.9 trillion relief bill passed by the House on Wednesday will impact the U.S. economy.

Fears that the scale of the stimulus would push inflation beyond the Federal Reserve’s comfort zone and trigger an interest rate hike have recently prompted yields to rise. This sapped the appetite for stocks of tech companies, which had benefited from a prolonged period of low rates. At the same time, optimism about the economic outlook has supported demand for shares of companies that would benefit from easing lockdowns.

Muted inflation data for the start of the year calmed nerves over the rate outlook. But bond yields are likely to remain volatile, changing dynamics between different segments of the stock market, said Monica Defend, head of research at French asset manager Amundi.

“Ultimately, it should be positive for the stock market if we have a little more inflation, a little more growth,” she said.

Tech stocks including Apple, Twitter and data mining company Palantir Technologies soared ahead of the bell in New York. Electric vehicle maker Tesla rose more than 4%.

Shares of video game retailer and online shopping sensation GameStop fell about 5% before it went to market. Volatility has returned in recent sessions to the so-called very stocks that are the darlings of individual investors who congregate on Internet forums.

Investors’ appetite for US government debt will be put to the test again on Thursday with the scheduled auction of $ 24 billion in 30-year bonds. The Treasury sold $ 58 billion in three-year notes on Tuesday and $ 38 billion in 10-year notes on Wednesday.

In overseas markets, the Stoxx Europe 600 index rose 0.4%.

The euro rose 0.2% to $ 1.1955 after the European Central Bank said it would step up the pace of its eurozone debt purchases after a recent rise in bond yields. The yield on German 10-year government bonds, considered the benchmark safe asset in the single currency area, fell to minus 0.361%.

“The euro zone cannot afford to tighten financial conditions, and we are importing that higher rates into the United States,” Ms. Defend said ahead of the rate decision. “This is something the ECB sees as a matter of concern.”

The Shanghai Composite Index in China jumped 2.4% in its largest single-day increase since October. The advance follows an article in a financial newspaper encouraging new investors to seek long-term returns and not be swayed by stock volatility, Deutsche Bank strategist Jim Reid said in a note.

Markets rose elsewhere in Asia, with Japan’s Nikkei 225 and South Korea’s Kospi gaining 0.6% and 1.9% respectively at the close.

Write to Joe Wallace at [email protected]