Futures for stock benchmarks Monday morning headed higher, suggesting a solid open for equities in the first full week of April as U.S. investors get the first chance to provide their most complete reaction to a report on Good Friday that showed that 916,000 jobs were added in March, handily exceeding Wall Street’s average consensus estimates.
Cash trading in equities—and most other markets—were closed in observance of the Good Friday holiday and trading in equity futures closed at 9:15 a.m. Eastern on the day, about 45 minutes after the release of the labor-market report. Most markets are closed in Europe in observance of Easter Monday.
How are stock benchmarks performing?
- Futures for the Dow Jones Industrial Average YM00, +0.69% YMM21, +0.69% were up 232 points, or 0.7%, to reach 33,269, which would push the blue-chip benchmark into record territory
- S&P 500 index futures ES00, +0.57% ESM21, +0.57% traded 22.85 points higher at 4,032.75, set for a 0.6% advance, extending a record rally for the index.
- Nasdaq-100 futures NQ00, +0.44% NQM21, +0.44% climbed 0.4% to reach 13,372.75, a gain of 56.75 points.
On Thursday, the Dow DJIA, +0.52% rose 171.66 points, or 0.5%, to 33,153.21, the S&P 500 SPX, +1.18% gained 46.98 points or 1.2%, to 4,019.87, while the Nasdaq Composite Index COMP, +1.76% added 233.23 points, or 1.8%, to 13,480.11.
What’s driving the market?
Job growth accelerated in March on the back of gains in restaurants and other businesses, marking the best report from the Labor Department in seven months as the U.S. added 916,000 new jobs and the unemployment rate fell to 6% from 6.2%.
Investors might look to services sector data on Monday for further evidence of improving conditions in the U.S. economy as it recovers from COVID.
A closely followed report from the Institute for Supply Management on the services sector for March is due at 10 a.m., with private data firm IHS Markit will also release at 9:45 a.m., data on services, which have been under pressure the most severe pressure during pandemic lockdowns and social-distancing protocols intended to limit the spread of the deadly disease.
However, the prospect of a sharp economic rebound, powered by a $1.9 trillion COVID aid package, with President Joe Biden also backing a $2.3 trillion infrastructure program, and the rollout of vaccines has stoked worries that the economy my overheat and compel the Federal Reserve to raise interest rates sooner than initial projections for 2023 or 2024.
“Growth prospects, the risk of inflation and the pace of vaccinations remain the dominant factors moving financial markets,” wrote Hussein Sayed, Chief Market Strategist at FXTM, in a daily note.
“Investors seem to be frontrunning the Federal Reserve anticipating at least a 25-basis point rate hike by the end of next year…If parts of Biden’s infrastructure proposal come to fruition in the next couple of months, we’re likely to see more policy makers joining the hawks,” Sayed wrote.
The 10-year benchmark Treasury note TMUBMUSD10Y, 1.726% has remained relatively muted despite the strong jobs figures, yielding around 1.73%, but rates are expected to climb as prices and appetite for government debt slips.
Looking ahead, market participants will glean some insights from the central bank when minutes from their March 16-17 policy meeting are released on Wednesday.
In public health news, the U.S. is unlikely to face a “true” fourth wave of COVID-19 outbreaks, but the country should wait a few weeks longer before easing mitigation efforts, former Food and Drug Administration Commissioner Dr. Scott Gottlieb said Sunday. His comments come as the global tally for the coronavirus-borne illness rose above 131.3 million on Monday, according to data aggregated by Johns Hopkins University, while the death toll rose above 2.85 million.
The U.S. continues to lead the world by cases, at 30.7 million, or about a quarter of the global tally, and fatalities, at 555,001. The country has averaged 64,019 cases a day for the past week, up 18% from the average two weeks ago, as cases continue to rise despite the vaccination program, a trend experts say is due to states reopening and dropping restrictions on movement and overall pandemic fatigue.
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Which stocks are in focus?
- GameStop Corp. shares GME, +0.86% took a dive Monday premarket, after the videogame and consumer electronics retailer filed to sell up to 3.5 million shares of its common stock “at the market.” That represents about 5.0% of the 69.9 million shares outstanding as of March 17.
- Wedbush Securities has upgraded its outlook for Tesla Inc. TSLA, -0.93%, following stronger-than-expected quarterly deliveries.
- Emergent BioSolutions Inc. EBS, -13.40% said Monday it is on track with all commitments for COVID-19 vaccines and reaffirmed its financial guidance, after a production problem at its Baltimore plant last week ruined a batch of the vaccine developed by Johnson & Johnson JNJ, -0.92%.