The Dow Jones Industrial Average gained 0.2%, and the Nasdaq Composite rose 0.3%
U.S. stock index futures were mildly higher in early morning trading on Wednesday, after a session that saw stocks alternate between gains and losses.
Futures contracts tied to the Dow Jones Industrial Average advanced 46 points. S&P 500 futures and Nasdaq 100 futures also both traded in marginally positive territory.
Stocks closed little changed on Tuesday as traders digested higher rates, possible additional stimulus measures and political turmoil.
The Dow Jones Industrial Average rose 60 points, or 0.2%, to 31,068.69. The Nasdaq Composite ended the day up 0.3% and the S&P 500 rose slightly to 3,801.19. Meanwhile, the yield on the benchmark 10-year Treasury briefly traded at 1.18%, its highest level since March.
Given the rise, Credit Suisse recommended that investors favour pro-cyclical sectors, including financials and energy. Rising rates could hurt growth stocks, however, and a number of tech heavyweights including Facebook and Apple declined during Tuesday’s session.
Expectations for additional fiscal stimulus is one of the reasons behind the steady move higher in yields. President-elect Joe Biden is expected to release details on his economic plan on Thursday.
At a minimum, even a USD 500bn fiscal package consisting of additional stimulus checks, extended unemployment benefits, and funding for healthcare and vaccine disbursement will be another boost to economic growth in 2021, noted Jason Draho, UBS Global Wealth Management head of Americas asset allocation.
Following Tuesday’s muted session, the major averages remain lower for the week after Monday’s slide. The Nasdaq Composite is the relative underperformer, down roughly 1% over the last two sessions. Small caps are, however, a bright spot, and the Russell 2000 is up 1.7% so far this week.
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