Equity futures edged higher on Wednesday, suggesting that the major indices will extend their rebound after a volatile period of trading triggered by concerns about the spread of the coronavirus.
Futures for the S&P 500 rose 0.4% per day after the broad gauge of the market recorded its biggest one-day gain since late March. The advance nearly canceled out the S&P 500’s steep decline from Monday and pushed the index to less than 1.5% of its closing high.
Contracts for the Dow Jones Industrial Average rose 0.6% on Wednesday, suggesting that the blue chip index will add to its opening rebound and close to its all-time high. Futures on the tech-focused Nasdaq-100 edged up 0.2%.
Investors are putting aside concerns about the economic effects of the Delta variant, although markets should remain nervous heading into the peak summer vacation period. A record start to the season among America’s biggest companies is helping to bolster sentiment. Many fund managers also see few other places to deploy cash with returns on government and corporate bonds were trading at depressed levels.
“The market faces a real test: whether the link between increasing cases and hospitalizations is broken,” said Peter van der Welle, multi-asset strategist at Robeco. Nonetheless, Mr van der Welle expects a second stage in reopening trade – in which bond yields, economically sensitive stocks and commodities have all risen – to begin once the Delta variant is over. Claire.
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Coca-Cola and Verizon Communications are among the big companies expected to report profits before the opening bell. Texas instruments,
Whirlpool and Equifax are expected to release their results after markets close.
Of the 60 components of the S&P 500 that filed quarterly results, 85% exceeded analysts’ expectations, according to FactSet.
The yield on 10-year Treasuries climbed to 1.234% from 1.208% on Tuesday. Yields are moving in the opposite direction to bond prices and have slipped in recent weeks, indicating less concerns about a prolonged breakout in inflation.
“Consumers are going to remain at least moderately cautious as Delta spreads everywhere,” said Christopher Jeffery, head of inflation and rate strategy at Legal & General Investment Management. “It’s really hard to think that the UK model won’t at least partially be followed in the US and Europe,” he added, referring to a spike in cases in the UK.
Still, Jeffery is bullish on the outlook for equities. “It is difficult for us to be structurally negative on stocks” given the good start to the results season, he said.
In overseas markets, the Stoxx Europe 600 jumped 1.3%, driven by shares of travel, leisure and retail companies.
Among individual stocks, the owner of British Airways, International Consolidated Airlines Group, airline EasyJet and cruise line Carnival all gained 5% or more. Next rose 8.9% after the British clothing retailer raised its profit forecast and declared a special dividend.
Japan’s Nikkei 225 rose 0.6% at the close of trading and the Shanghai Composite Index rose 0.7%.
Write to Joe Wallace at [email protected]
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