Stock Futures Rise as Tech Leads Charge
By Caitlin Ostroff
U.S. stock futures rose on strong earnings and renewed investor
enthusiasm for big technology companies.
Futures tied to the tech-heavy Nasdaq-100 led markets, rising
0.4%, indicating the index may climb further after notching its
third record high this year on Wednesday. Contracts tied to the
broader S&P 500 rose 0.2%, and those linked to the Dow Jones
Industrial Average edged up 0.1%.
Railroad operator Union Pacific will post earnings before the
opening bell, along with several regional banks, including KeyCorp
and Fifth Third Bancorp. Chip giant Intel and International
Business Machines are slated to announce quarterly results after
Investors are watching earnings closely to see if they support
the strong run across markets in recent months. Many have bet on an
economic recovery this year, as Covid-19 vaccinations ramp up,
increasing prospects for future earnings.
"Earnings season looks relatively good and seems to confirm this
picture that the U.S. -- because there was no full lockdown -- did
well in the fourth quarter," said Carsten Brzeski, ING Groep's
global head of macro research. "Stock markets are really looking
through the short-term outlook for the economy, which has worsened
over recent days."
Investors are paying close attention to company guidance for the
sectors most affected by the coronavirus pandemic. In offhours
trading, shares of United Airlines fell 2.2% after the airliner
said it expected the pandemic to continue to weigh on travel demand
Supporting markets is the expectation that central banks and
governments will step in if financial conditions deteriorate. This
has encouraged investors to seek out higher returns, including in
Japan's Nikkei 225 Index rose 0.8% Thursday and is trading near
its highest level in 30 years. India's benchmark stock gauge, the
S&P BSE Sensex Index, hit a record high Wednesday. Indexes in
China and South Korea rallied, with the Shanghai Composite up 1.1%
and Korea's Kospi rallying 1.5%. Hong Kong's Hang Seng declined
The backstop from governments and central banks -- plus
consensus among investors for a strong economic recovery this year
-- has squeezed volatility out of the market. The Cboe Volatility
Index, known as the Vix and seen as Wall Street's fear gauge, was
at 21.44 Thursday, its lowest since December.
A day after President Joe Biden was inaugurated, money managers
are keeping a close eye on his proposed $1.9 trillion Covid relief
package, and the prospects for it proceeding through Congress.
While stocks have taken their cue from the stimulus plans,
investors in bonds have been more skeptical of a big spending push,
keeping yields relatively subdued, said Daniel Morris, BNP Paribas
Asset Management's chief market strategist.
The yield on the benchmark 10-year Treasury note ticked down to
1.082% Thursday from 1.089% Wednesday. Yields fall when bond prices
"At least one part of the market is saying 'nice idea,' but if
you really thought you'd get $1.9 trillion in stimulus, yields
would be higher," said Mr. Morris.
Overseas, the pan-continental Stoxx Europe 600 rose 0.4%.
Information technology and communication services sectors led
gains, while industrials and energy sectors lost ground. Shares of
Cellnex Telecom climbed 3.9% for a four-session run of gains and
The Sage Group jumped 4.9%.
The European Central Bank is expected to keep policy unchanged
after its monetary policy meeting at 7:45 a.m. ET. Investors will
be listening to see what ECB President Christine Lagarde says about
the euro's rise against the dollar, inflation projections and
economic growth, as European nations combat the Covid-19
The U.S. will publish jobless claims for the week ending Jan. 16
at 8:30 a.m. Claims have moved higher in recent weeks, as companies
lay off workers amid a surge in Covid-19 cases. Also due at 8:30
a.m., fresh data is expected to show that U.S. housing starts
picked up again in December.
Write to Caitlin Ostroff at firstname.lastname@example.org
(END) Dow Jones Newswires
January 21, 2021 05:46 ET (10:46 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.