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U.S. stock index futures rose on Sunday night as Wall Street braces for the busiest earnings week, which will include reports from some of the biggest tech companies.
Futures linked to the Dow Jones Industrial Average gained 74 points, indicating a 90-point jump at the open. S&P 500 futures were up 0.33%, while Nasdaq 100 futures were up 0.56%.
Stocks ended mixed on Friday – the S&P 500 and Dow ended in the red while the Nasdaq Composite closed at a record high – although all three posted gains for the week. The Dow recorded its fifth positive week in six while the S&P recorded its third positive week in four. The Nasdaq rose 4.19% last week for its best week since November and its fifth positive week of six as stocks of big names in tech propelled the index to a new all-time high.
The hike came as President Joe Biden tries to push through a $ 1.9 trillion stimulus package that many Republicans in Congress oppose. Tax assistance includes direct checks to millions of Americans, aid to states and local governments, funding for vaccines and Covid tests, a minimum wage increase, and improved unemployment benefits, among others.
Lindsey Bell, chief investment strategist at Ally Invest, noted that any additional stimulus could lead to a surge in inflation.
“At this time, watch for signs of inflation as a temporary or longer-term trend. If it’s just a quick shock, we might see some market weakness without any major Fed action. “, she noted. “On the other hand, persistently high inflation may force the Fed to consider raising rates and withdrawing support from the market.”
In an inflationary environment, Bell said investors should favor the consumer staples, energy and financials sectors. She added that real estate and gold are some of the other assets that can help protect against inflation.
Next week, 13 Dow components and 111 S&P 500 companies are expected to report earnings. Quarterly reports on the bridge include those from Apple, Microsoft, Netflix, Tesla, McDonald’s, Honeywell, Caterpillar and Boeing.
According to data from Bank of America, of the S&P 500 components that have already reported profit, 73% beat both sales and EPS. The firm said the tracking was similar in the last quarter, when the number of beating companies hit a record.
The number of coronavirus cases continues to climb in the United States and abroad, but many economists predict a return to growth later this year.
“We continue to expect that a reduction in virus risk from mass vaccination coupled with tax support for consumer spending will lead to a mid-year consumption boom and very strong growth. in 2021, “said Jan Hatzius, chief economist at Goldman Sachs. a note to customers during the weekend. “We are currently forecasting full year GDP growth of + 6.6%, 2½pp above consensus,” he added.
However, the company noted that while risks such as insufficient budget support now appear less likely, other risks remain. Hatzius cited consumers remaining more cautious than expected, as well as the evolution of a vaccine-resistant strain of virus as potential future headwinds for the market.
Biden’s surgeon general’s pick said on Sunday the United States was fighting to keep pace with the coronavirus mutation.
“The virus is basically telling us that it’s going to keep changing and that we have to be ready for it,” Dr Vivek Murthy told ABC News “This Week”.
“We have to be number one, do much better genomic surveillance, so that we can identify variants when they arise and that means we have to double up on public health measures like masking and avoiding gatherings inside,” he added.
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