By Anna Hirtenstein
U.S. stock futures rose Tuesday, suggesting that the major
indexes may notch fresh records after the market opens.
Futures linked to the S&P 500 climbed 1%, signaling that the
broad market gauge is likely to erase its muted losses from Monday
and extend the November rally. The S&P 500 ended at an all-time
high last week, its 26th for this year.
Contracts tied to the technology-heavy Nasdaq-100 index rose
0.8%, while Dow Jones Industrial Average futures gained 1.1%.
Investors' sentiment has been buoyed in recent weeks by the
development of Covid-19 vaccines, which could curtail infection
levels and let social and business activity return to pre-pandemic
"The mood of the market is rather optimistic," said Eric
Barthalon, global head of capital markets research at Allianz. "For
the time being, markets have bought the news that vaccines are
going to be rolled out earlier than expected."
Policy makers such as Federal Reserve Chairman Jerome Powell are
paying more attention to potential hurdles in widespread
distribution of the vaccines, and other challenges before the
economy returns to normal, Mr. Barthalon said.
Mr. Powell, in testimony prepared for delivery at a
congressional hearing Tuesday, said the Fed's actions to backstop
credit markets this past spring had unlocked almost $2 trillion to
support businesses, cities and states. He is scheduled to testify
before Congress at 10 a.m. ET. Investors are likely to be watching
for further insights into the pace and strength of the economic
recovery when he takes questions from lawmakers.
Treasury Secretary Steven Mnuchin is also expected to
"Officials seem to be paying much more attention to the
implementation risks than markets," Mr. Barthalon said. "There is
clearly a contrast between market expectations and officials'
Ahead of the market open, Tesla rose over 5% after S&P Dow
Jones Indices said it would add the car maker's full weight to the
S&P 500 in one move.
Shares in Zoom Video Communications dropped over 7% premarket.
The videoconferencing company on Monday signaled that higher sales
in recent months have come with higher costs, disappointing
investors. Moderna surged over 14%, extending a rally that saw the
stock climb more than 20% on Monday.
Surveys of purchasing managers in the U.S., scheduled for
release starting at 9:45 a.m. ET, are expected to show continued
growth in the manufacturing sector in November.
A report on construction spending, due at 10 a.m., is expected
to show it rose at a faster pace in October, echoing broader
strength in the housing market.
The U.S. dollar continued to weaken against a basket of
currencies, with the WSJ Dollar Index sliding 0.3% and hovering
near its lowest in more than two years.
In bond markets, the yield on the benchmark 10-year Treasury
note edged up to 0.872%, from 0.845% on Monday.
Overseas, the pan-continental Stoxx Europe 600 rose 0.7%.
Surveys on manufacturing activity in many major European economies
on Tuesday showed a broad continued expansion in the eurozone.
"The manufacturing sector is one part of the European economy
that is actually managing to retain some degree of resilience,"
said Michael Hewson, a chief markets analyst at CMC Markets.
"Ultimately it is encouraging, but it doesn't tell us much about
the more vulnerable sectors of the economy like services."
The U.K. was one of the best performing stock markets in Europe,
with the FTSE 100 index rising 1.7%.
Among European equities, UniCredit retreated over 8% in Italy
after Chief Executive Officer Jean Pierre Mustier said he would
step down in April following a disagreement on strategic direction
with the board.
Investors sold down government bonds in southern Europe after a
European Central Bank policy maker, Isabel Schnabel, told Bloomberg
News in an interview that the ECB shouldn't bend to market
expectations and loosen policy much further. Investors have been
betting that the ECB will announce a sizable extension to its
bond-buying program on Dec. 10.
"Schnabel sounded somewhat hawkish," said James Athey, an
investment manager at Aberdeen Standard Investments. "This close to
an ECB meeting, with expectations high for a dramatic easing, a
core member of the governing council saying that it's not the ECB's
job to give markets what they want: that is done it."
The yield on Italy's benchmark 10-year bond rose to 0.627%, from
0.586% on Monday.
In Asia, most major benchmarks rose by the close of trading. The
Shanghai Composite Index added 1.8%, Hong Kong's Hang Seng advanced
0.9% and Japan's Nikkei 225 climbed 1.3%.
A private gauge of manufacturing activity in China showed that
it hit its highest level in a decade in November, signaling a
strong recovery in the world's second-largest economy.
Write to Anna Hirtenstein at firstname.lastname@example.org
(END) Dow Jones Newswires
December 01, 2020 09:22 ET (14:22 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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