Futures linked to the S&P 500 were up 0.7%. Contracts linked to the Nasdaq-100 rose 1.7 percent, suggesting technology stocks will rebound after a moderate decline in the sector on Wednesday. Futures for the Dow Jones rose 0.3 percent, a day after the blue-chip index closed at a record high.
Stock futures continued to rise after data showed that 712,000 people filed their first applications for unemployment last week, slightly below economists’ estimates. The figure, which is an approximation of the number of unemployed, represents a drop of 42,000 from the previous week and is a new sign of improvement in the labour market after weakening figures for Covid 19 cases.
As bond markets stabilized, investor demand for equities picked up. The yield on the 10-year Treasury Note, which resumed its course, fell to 1.507% from 1.520% on Wednesday, on its way to a third consecutive day of declines. This week the yield rose to 1.594%.
Shares reacted to sharp swings in bond yields, fueled by uncertainty about the impact on the US economy of the $1.9 trillion bailout package approved by the House of Representatives on Wednesday.
Fears that the level of stimulus will push inflation outside the Fed’s comfort zone and trigger a rate hike have driven yields higher recently. This has increased interest in technology stocks, which have benefited from a long period of low interest rates. At the same time, optimism about the economic outlook boosted demand for stocks of companies that would benefit from an easing of lock-up periods.
Weak inflation data at the beginning of the year eased concerns about interest rate expectations. But bond yields are likely to remain volatile, changing the dynamics between different segments of the equity 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 and a little more growth, she said.
Tech stocks like Apple, Twitter and a data mining company.
climbed all the way to the bubble in New York. Tesla, maker of electric cars, is up more than 4%.
Actions by video game retailers and the online retail sensation
is down about 5% on the market. Volatility has returned in recent sessions to so-called meme stocks, which are favored by individual investors who congregate in online forums.
Investor interest in U.S. government bonds will be tested again Thursday with a planned auction of $24 billion in 30-year bonds. The Treasury sold $58 billion worth of three-year bonds on Tuesday and $38 billion worth of 10-year bonds on Wednesday.
On foreign markets, the Stoxx Europe 600 rose by 0.4%.
The euro rose 0.2% to $1.1955 after the European Central Bank said it will increase the pace of its bond purchases in the euro zone following a recent rise in bond yields. The yield on 10-year German government bonds, the benchmark for safe investments in the currency zone, fell to minus 0.361%.
The eurozone cannot afford to tighten financial conditions and we have derived that from the US rate hike, Defender said ahead of the rate decision. This is a matter of concern for the ECB.
traders worked the floor of the New York Stock Exchange on Wednesday.
Nicole Pereira/Associated Press
China’s Shanghai Composite Index rose 2.4 percent, its biggest one-day gain since October. This initiative follows the publication of an article in a financial journal that urged new investors to seek long-term returns and not be swayed by stock volatility,
Strategist Jim Reed said in the memo.
Other Asian markets rose: Japan’s Nikkei 225 and South Korea’s Kospi ended the year 0.6% and 1.9% higher, respectively.
Email Joe Wallace at [email protected]
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