Stock Futures Climb, Benchmark Averages Poised to Extend Gains

28 Jun 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • Wall Street looks to build on existing gains as futures flash in green
  • A bipartisan agreement adds fuel to the already hot rally in equities

The US stock market continues to be on a tear as futures indicate a higher open in pre-market trading hours on Monday. Last week, Wall Street notched its best weekly performance since February after the market cheered the new infrastructure agreement between President Biden and a bipartisan group of Senators.

Investors are looking to build on the existing rally today. Futures contracts tied to the Dow Jones Industrial Average are positive by about 0.04%, while S&P futures are higher by around 0.05%. Nasdaq futures are trading to the upside by roughly 0.15% ahead of the opening bell in New York.

Investors have been increasing their bets on stocks in economically sensitive sectors to technology companies. The buying momentum has lifted the main stock averages as investors have shrugged off higher inflation readings that knocked Treasuries. The broad move further in stocks pushed the S&P500 to a new record on Friday as market participants’ risk appetite outweighed the highest US inflation data in 29 years.

Equities sprinted right out of the gate last Monday. The race to higher grounds pushed the Dow to its biggest one-day climb since March. Throughout the week, stocks continued to rise, leading to Friday’s gains when the Dow Jones Industrial Average added 237.02 points, or 0.69%, to finish the week at 34,433.84. The 30-stock blue-chip average now sits less than 2% from its record. The S&P500 rose 14.21 points, or 0.33%, closing at a new high of 4,280.70. The Nasdaq Composite ended modestly in the red, declining 9.32 points, or 0.06%, to 14,360.39. Despite the drop on Friday, the tech-heavy index ended the week higher by 2.35% and has advanced 4.45% in June.

Benchmark Stocks on the Rise

All three benchmark stock indexes rose last week despite a report from the Commerce Department which showed its inflation indicator rose 3.4% in May, the most rapid inflation growth on an annual basis since the early 1990s.

The next piece of significant economic data would be the June jobs report scheduled to arrive at the end of the week. Investors will be monitoring the latest jobs figures for they will indicate whether the pace of recovery is accelerating or employers are struggling to find workers to fill job openings. On the back of increased inflation, Friday’s report is expected to highlight higher wage pressures, with an expected 3.6% climb in average hourly earnings compared with data from a year ago.

In Washington, the massive bipartisan infrastructure deal that aims to invest roughly $1tn in the US economy was back on the table on Saturday. The deal revitalized after Republicans balked at President Biden’s insistence that the fate of the deal is tied to a more comprehensive legislation.

Facing pressure from the GOP, Joe Biden has walked back his threat to refuse to sign the $1tn infrastructure agreement, saying it was not his intention to create the impression that he was issuing a veto threat on the plan.

Joe Biden’s move was interpreted as a step to maintain the balance between Republicans and Democrats who are expected to continue working together on Capitol Hill as they must negotiate the rest of Mr. Biden’s economic proposals.

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