Stock futures headed for a higher open on Monday at the start of a holiday-shortened week.
Contracts on the Dow added nearly 100 points, or 0.3%, with about two hours to go until the opening bell. The S&P 500 and Nasdaq each also advanced. Investors are kicking off the week on a strong note, with equity and bond-market trading set to close fully on Thursday and early on Friday for the Thanksgiving holiday.
Optimism over new deal-making activity across numerous industries helped push stocks higher in pre-market trading. Constellation Brands (STZ), the maker of Corona beer, is reportedly exploring a deal to combine with Coca-Cola-backed (KO) energy drink company Monster Beverage, according to a Bloomberg report on Monday. And private equity firm KKR & Co. made an about $12 billion bid to bring Telecom Italia private, sending shares of the Italian telecommunication giant sharply higher.
Investors also shook off jitters from late last week, when rising COVID-19 cases globally set off fresh concerns over the virus’s spread. The Austrian government implemented a fourth national lockdown since the start of the pandemic, effective Monday and lasting for at least 10 days, to try and stem jumping infections. Germany has considered a similar move. The latest round of stay-in-place orders raised concerns for investors that a drop in consumer mobility might ultimately place renewed pressure on economic activity domestically and abroad.
“In the United States, COVID cases have declined but remained above summer lows and have been edging up recently,” Rubeela Farooqi, High Frequency Economics chief economist, wrote in a note Monday. “We do not expect lockdowns in the United States. Experience with the Delta variant suggests that mandated lockdowns are not needed to suppress activity. Wary of health risks from rising case counts, people may voluntarily avoid high-contact activity.”
Elsewhere, traders also are keeping a close eye this week on President Joe Biden’s pick for the new chair of the Federal Reserve. The nomination is expected to go to either current Federal Reserve Chair Jerome Powell or to current Fed Governor Lael Brainard, and the decision could be announced at any point this week or beyond.
The new leader will be tasked with helping lead the central bank as it grapples over the coming months with whether the economic recovery has progressed enough to warrant a deeper reduction in monetary policy support.
“The most important question in the moment right now is how high the Fed ultimately hikes interest rates,” John McClain, portfolio manager for Brandywine Global’s high yield and corporate credit strategies, told Yahoo Finance Live on Friday. “Right now, expectations are for about two and a half to three hikes in 2022, and probably getting to about 175 basis points on Fed funds ultimately.”
“The market and the media are focused on a faster Fed tapering and hiking sooner than June of next year,” he added. “And importantly, we’re seeing inflation and things that matter to the consumer, prices at the pump, food, rent, all are going higher. And the list kind of goes on and on.”
More data on the inflation front is set to be released this week, which will further provide data hinting at whether the Fed may need to step in sooner rather than later to curb persistently elevated prices. The core personal consumptions expenditures (PCE) index from the Bureau of Economic Analysis out Wednesday, which serves as the Fed’s preferred inflation gauge, will likely show a 4.1% over last year, based on Bloomberg consensus data. This would be the biggest annual jump in about three decades.
7:52 a.m. ET Monday: Stock futures advance
Here’s where markets were trading Monday morning:
S&P 500 futures (ES=F): +13.75 points (+0.29%), to 4,708.25
Dow futures (YM=F): +88 points (+0.25%), to 35,637.00
Nasdaq futures (NQ=F): +64.75 points (+0.39%) to 16,639.75
Crude (CL=F): -$0.13 (-0.17%) to $75.81 a barrel
Gold (GC=F): -$8.90 (-0.48%) to $1,842.70 per ounce
10-year Treasury (^TNX): +4.5 bps to yield 1.581%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter