Stock Futures Rally, Led by Tech
By Will Horner
U.S. stock futures edged up Tuesday, suggesting that the major
indexes are poised to rebound ahead of data on new home
Futures tied to the S&P 500 index rose 0.4%, while Dow Jones
Industrial Average futures added 0.3%. Nasdaq-100 futures rallied
0.8%, putting technology shares on course to pare some recent
Stocks have been choppy in recent trading sessions as concerns
about a spike in inflation weighed on sentiment. Investors are
contending with a raft of unknowns, such as whether rising prices
will prove temporary or more persistent, and whether the Federal
Reserve will act by raising interest rates sooner than planned.
"That always was the key risk: central banks taking away the
liquidity punch bowl before the party has ended," said Brian
O'Reilly, head of market strategy for Mediolanum International
Inflation ranging between 2% and 4% could be the "sweet spot"
for stocks, said Mr. O'Reilly. The economic rebound that is fueling
inflation is likely to continue benefiting stocks that are
sensitive to the reopening, such as banks, travel and leisure
companies. But companies with strong balance sheets and an ability
to raise prices, such as pharmaceutical companies and makers of
common household goods, should also do well, he said.
"Inflation isn't necessarily bad for equities, but there will be
winners and losers in terms of [which ones] are better at passing
on that inflation to the customer," said Mr. O'Reilly.
While tech stocks have taken the biggest hit from rising
inflation concerns, some investors see the recent retreat as an
opportunity to buy fast-growing companies.
"Within tech, there are still some companies that look very
cheap," said Jane Shoemake, client portfolio manager at Janus
Henderson Investors. "If you believe in the longer-term trends
supporting these companies, you should be buying."
Fresh data on U.S. housing starts for April is due at 8:30 a.m.
ET. Economists are forecasting a small step back in new
home-building after it hit a 15-year high in the previous month.
Demand for houses has been strong during the pandemic, but
construction firms have also warned about the impact of soaring
lumber prices and labor-supply constraints.
Major retailers including Macy's and Walmart are due to report
earnings ahead of the opening bell.
Overseas, the Stoxx Europe 600 rose 0.5%. The U.K.'s FTSE 100
gained almost 0.5% after data showed the U.K.'s unemployment rate
edged lower in April.
Most major Asian indexes closed higher. Japan's Nikkei 225
gained 2.1%, while in Hong Kong, the Hang Seng Index rose 1.4%.
Taiwan's Taiex jumped 5.2%. In mainland China, the Shanghai
Composite Index edged up 0.3%.
Write to Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
May 18, 2021 04:59 ET (08:59 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.