U.S. stock-index futures traded higher early Monday as investors shifted their focus to corporate earnings starting early this week and the vagaries of coronavirus stimulus negotiations.
Attention also has been trained on the U.S. presidential elections which stand just about three weeks away.
Meanwhile, the bond market is closed on Monday in observance of the Columbus Day holiday, also celebrated by many as Indigenous Peoples’ Day.
Futures for the Dow Jones Industrial Average (YMZ0) were trading 29 points, or 0.1%, higher at 28,547; those for the S&P 500 index (ESZ0) were up 20.20 points at 3,493.50, a rise of 0.6%; while Nasdaq-100 futures (NQZ0) were advancing 195.75 points, or 1.7%, at 11,920.50.
On Friday, the Dow (DJIA) posted a 3.3% weekly gain, representing the sharpest weekly rise since Aug. 7. The S&P 500 (SPX) rose 3.8% over the period and the Nasdaq Composite (COMP) rallied by 4.6%. The S&P 500 and the Nasdaq posted their best weekly percentage gains since the period ended July 2, according to FactSet.
Recent reports indicate that an additional coronavirus stimulus package that achieves bipartisan support won’t be forthcoming imminently, as Democrats over the weekend rejected a $1.9 trillion proposal from Treasury Secretary Steven Mnuchin, representing the Trump administration’s most generous aid proposal thus far.
“This past week, the president demonstrated very clearly that he has not taken the war against the virus seriously, personally or nationally. This attitude is reflected in the grossly inadequate response we finally received from the administration on Saturday,” wrote Democratic House Speaker Nancy Pelosi wrote in a Sunday letter. “Until these serious issues are resolved, we remain at an impasse.”
During an interview with Fox News, President Donald Trump cast Pelosi as a point of resistance in getting additional help for out-of-work Americans and troubled businesses. “Republicans want to do it. We’re having a hard time with Nancy Pelosi,” he said Sunday.
On-again-off-again negotiations over additional stimulus have been one of the main catalysts for the markets over the past few months.
A lack of fresh aid may force investors to turn to the next round of corporate earnings and the elections, with a little over 20 days remaining in the race for the Oval Office between former Vice President Joe Biden, who has led in most major national polls, and Republican incumbent Trump.
“Stock markets have been surprisingly resilient over the last week or so, despite the increasingly diminishing short term prospect of a U.S. stimulus deal, against a backdrop of rising infection rates across Europe, and the rising likelihood of further restrictions,” wrote Michael Hewson, chief analyst at CMC Markets UK.
“One reason behind recent stock market resilience could be a growing belief that whoever wins next month, with the polls increasingly leaning towards Biden, there will be a sizable fiscal stimulus coming whoever wins, with the only unknown being around the size of any possible package,” wrote the CMC analyst in a Monday report.
Meanwhile, S&P 500 companies’ overall earnings performance are expected to be less-bad than the second quarter, when earnings fell the most since the 2008 financial crisis, according to FactSet data. The aggregate blended year-over-year growth estimate per share, which includes some earnings already reported and the average analyst estimates of coming results, is for a negative 20.5% as of the end of last week, following a 31.4% plunge in the second quarter.
Investors may be more focused on the rate of change in the decline, rather than how far earnings are falling, MarketWatch’s Ciara Linnane and Tomi Kilgore report.
Separately, the spread of the COVID-19 pandemic in Europe was forcing some reimplementation of lockdown measures. U.K. Prime Minister Boris Johnson was expected to outline the restrictions in a statement to the public on Monday.
In Asia, China’s equity market were ebullient on optimism that President Xi Jinping is planning to further open parts of the economy to outside investment.
The yield on the 10-year Treasury note (BX:TMUBMUSD10Y) was at 0.779%. Bond yields move inversely to prices.
The ICE U.S. Dollar Index (DXY) a measure of the greenback against its major rivals, was up 0.2%.