U.S. equity futures were trending higher ahead of the Friday’s opening bell as stocks have risen this week and market volatility has collapsed, reflecting investors’ easing concerns about higher inflation and tighter monetary policy.
A recovery in the U.S. economy is a boon for this export-driven region. Although the vaccine rollout in Asia has lagged most parts of U.S. and Europe, the perk from an overseas recovery is likely to come long before herd immunity against the coronavirus pandemic.
On Wall Street, the S&P 500 marked another record high, beating the peak it set early last week. Stocks added to their gains in the afternoon after Biden announced the infrastructure deal, which is sure to benefit companies in the construction industry.
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Caterpillar rose 2.6% and Vulcan Materials gained 3.3% on the news.
The plan, costing $973 billion over five years, is the culmination of months of talks, and a larger spending plan from Biden is still possible later this year.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said the proposed agreement is favorable for industrials, financials and energy stocks, although “the general re-opening of the economy and renewed, post-COVID-19 economic growth is the most likely driver” of the market going forward.
The S&P 500 index rose 24.65 points, or 0.6%, to 4,266.49. The Dow Jones Industrial Average rose 322.58 points, or 1%, to 34,196.82. The Nasdaq added 97.98, or 0.7%, to 14,369.71.
Small-company stocks did much better than the rest of the market. The Russell 2000 index climbed 30.15 points, or 1.3%, to 2,333.62.
Markets have calmed since the Federal Reserve surprised investors last week by saying it could start raising short-term interest rates by late 2023, earlier than expected, if recent high inflation persists.
The super-low rates the Fed engineered to carry the economy through the pandemic have propped up prices across markets, and any change would be a big deal, so the Fed’s announcement triggered selling of stocks and a rise in Treasury yields last week. However that selling reversed this week. The three major indexes are all up more than 2% this week and are once again near records.
Investors had little negative reaction to a report that 411,000 Americans filed for unemployment benefits last week, down 7,000 from the week before. That was a much more modest decline than expected, and the second week in a row where unemployment benefits claims stalled after declining steadily for months.
Meanwhile, orders to U.S. factories for big-ticket manufactured goods rose for the 12th time in the last 13 months in May, pulled up by surging demand for civilian aircraft. The Commerce Department said Thursday that orders for durable goods — meant to last at least three years — climbed 2.3% in May, reversing a 0.8% drop in April and coming despite a backlogged supply chain and a shortage of workers.
Rite Aid plunged 14.5% after the drug store chain said it expects to report a loss for the year, due to pressure on its pharmacy benefits services and lower-than-expected sales.
Eli Lilly rose 7.3% after the Food and Drug Administration gave expedited approval to the drugmaker’s experimental Alzheimer’s treatment.
BuzzFeed announced it would go public with an implied value of $1.5 billion through a merger with a special purpose acquisition company. The media company will trade under the ticker BZFD but has not chosen a stock exchange yet.
Meanwhile, Asian shares rose Friday, buoyed by a rally on Wall Street that came after Biden’s announcement of a bipartisan deal on infrastructure spending.
Japan’s benchmark Nikkei 225 jumped 0.7% in afternoon trading to 29,067.13. South Korea’s Kospi gained 0.5% to 3,301.76. Australia’s S&P/ASX 200 edged up 0.6% to 7,315.00. Hong Kong’s Hang Seng surged 1.3% to 29,246.23, while the Shanghai Composite rose 1.1% to 3,606.50.
“The breakthrough in infrastructure spending talks overnight has lifted sentiments, with spending plans historically being a positive for the markets,” said Yeap Jun Rong, market strategist at IG in Singapore. “Sectors leaning towards economic recovery and reopening may see strength.”
Shares in Japanese electronics company Panasonic Corp. shot up more than 4% after it confirmed that it had sold off all the Tesla Inc. shares it owned, worth about 400 billion yen ($3.6 billion). Panasonic said the partnership with the U.S. electric vehicle company will continue, but it wanted cash for future investments, without disclosing details.
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In energy trading, benchmark U.S. crude stood unchanged at $73.30 a barrel. Brent crude, the international standard, was also unchanged at $75.56 a barrel.
In currency trading, the U.S. dollar inched down to 110.82 Japanese yen from 110.87 yen. The euro cost $1.1939, up from $1.1930.