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The Tuesday Market Minute

  • Global stocks ride strongest winning streak in 17 years amid renewed recovery hopes and stronger vaccine rollouts.
  • CDC data shows 11.5% of the U.S. population now has at least 1 shot of a COVID vaccine, with new injections hitting a daily pace of 1.2 million – nearly three times the rate of new infections.
  • The U.S. dollar slides to a four-week low against its global peers as risk appetite improves, with benchmark 10-year Treasury yields rising to the highest since March 2020.
  • Bitcoin prices near $50,000 as the world’s biggest cryptocurrency adds to its stunning year-to-date gains of more than 70%.
  • U.S. oil prices close in on $60 amid refining shutdowns in Texas triggered by a record cold snap that has tested electricity grids throughout the southwest.
  • U.S. equity futures suggest another record high open on Wall Street ahead of fourth quarter earnings from CVS Health and the New York Empire State Manufacturing index at 8:30 am Eastern Time.

U.S. equity futures powered higher Tuesday, while global stocks extended their longest winning streak in at least 17 years, as investors continue to ride a COVID recovery trade built by accelerating vaccine rollouts and improving corporate earnings.

With President Joe Biden finding support for his $1.9 trillion stimulus bill from a Congress now unfettered by impeachment proceedings, investors are betting that the new injection of cash, alongside a vaccine effort that has partly-inoculated just over 11.5% of the U.S. population, will continue to boost sentiment.

Corporate earnings, as well, have impressed over the final three months of the year, even amid a pullback in consumer spending and uncertainty over the path of the virus heading into the holiday season.

With just over 75% of the S&P 500 reporting, fourth quarter earnings are expected to grow 3.5% from last year to a share-weighted $356.3 billion, according to Refinitiv data, with current quarter earnings looking at a 21.1% improvement from the same period last year.

The healthy backdrop, as well as a weaker U.S. dollar, has stocks on the move again Tuesday, with contracts tied to the Dow Jones Industrial Average indicating a 210 point opening bell gain that would take the index to a fresh-all time high and extend its post-election advance to around 8.4%.

Futures contracts tied to the S&P 500, which is up 4.7% for the year, are priced for a 20 point gain while those linked to the Nasdaq are indicating a 60 point advance for the tech-focused benchmark.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, is trading at a four-week low of 90.216, even as benchmark 10-year Treasury note yields hold at a March 2020 high of 1.233%. 

The dollar weakness is providing some support to oil prices, as is the shuttering of refining capacity in Texas amid the worst cold snap in nearly a century, with U.S. crude trading just south of the $60 mark in early European dealing.

The greenback’s decline is also accentuating another record run for Bitcoin prices, which are testing the $50,000 mark amid a year-to-date gain of nearly 70% for the world’s biggest cryptocurrency.

Elsewhere, European stocks tested the highest levels in a year after a stronger-than-expected reading of German business morale and data showing a modestly better reading for GDP over the final months of last year, which included a 5% year-on-year contraction for the 19 countries that use the single currency. 

Overnight in Asia, Japan’s Nikkei 225 closed at a thirty-year high of 30,467.75 points, absorbing most of the region’s bullish sentiment amid market closures in China linked to the country’s Lunar New Year celebrations.