Inventory futures decline after key averages shut at file highs
US stock index futures were lower early Friday morning after major averages closed at new highs.
Futures contracts linked to the Dow Jones Industrial Average fell 79 points. S&P 500 futures and Nasdaq 100 futures also traded in slightly negative territory.
The main averages emerged from a record session in which all three indices closed at new highs. During regular trading hours, the Dow rose 148 points to return 0.49%. The S&P 500 and Nasdaq Composite hit both intraday and record closing highs, gaining 0.58% and 0.84%, respectively.
The leg up came amid optimism about Covid vaccines and hopes Washington will soon come to a consensus on additional incentive measures.
Leaders on Capitol Hill said they were on the verge of an agreement that would provide $ 900 billion in additional aid. The month-long talks are about to begin, and federal funding will expire on Saturday at 12:01 a.m. ET.
Senate Majority Leader Mitch McConnell, R-Ky., Said Thursday that a “bipartisan, bicameral agreement appears to be at hand”. Noting that it was “very likely” that Congress would work through the weekend, he said lawmakers may need to pass a short-term funding measure to buy enough time to pass legislation.
House spokeswoman Nancy Pelosi, D-Calif., Also said Democrats are nearing consensus. “We made some progress this morning,” and “awaiting feedback,” she told reporters on Thursday.
The rise in stocks on Thursday came despite a surge in Covid cases as well as disappointing economic data. The number of unemployment claims was 885,000 last week, its highest level since early September and above the expected pressure of 808,000. The data released on Wednesday showed that retail sales fell 1.1% in November, above the 0.3% decline expected by economists.
“The bad news this week is that the third wave is worsening and the economic damage from the pandemic continues to worsen,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “The good news is that policymakers are starting to contain the virus and the federal government is likely to put in place a stimulus package that will mitigate both of the main risk factors.”
McMillan said investors should expect higher volatility in the short term, given developments in the stimulus and vaccines space, before the economy returns to growth in 2021. “With vaccines now available and rampant, we are at the end of the start of the pandemic and the markets are realizing that,” he added.
On Thursday evening, Food and Drug Administration advisors overwhelmingly backed Moderna’s Covid vaccine, a major step towards FDA approval for public distribution.
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