Stable equity futures after S&P 500 best day since July

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Stock futures held onto their gains after the best day for stocks since July, with major indexes looking to shed past volatility and end the week on a high note. The S&P 500 was heading for a weekly gain of 0.4% at Thursday’s close.

Equity investors have managed to ignore concerns over China’s Evergrande debt crisis, uncertainty over monetary and fiscal policy, and ongoing debates in Washington over what debt ceiling to trade upwards.

Cyclical stocks, including industrials, energy and financials, outperformed this week after the Federal Reserve signaled that the economic recovery “has made progress” towards central bank targets in employment and inflation. The Fed has also prepared the markets for its asset buyback to begin in November in an improving economic environment.

“It’s no surprise to me that the Fed is moving forward with the tapering,” Jeff Schulze, chief investment strategist at ClearBridge, told Yahoo Finance Live on Thursday. “If you think about the three-month moving average… we’re at about 740,000 jobs created per month. It’s stronger than anything we’ve ever seen before COVID.”

“For the first time in a long time, the markets are encouraging a slightly more hawkish Fed,” he added. “It is becoming clear to participants that we are past the Delta peak, you are going to see a very strong re-acceleration over the next two quarters, and that will go a long way in driving earnings up.”

Treasury yields surged on Thursday, with the benchmark 10-year yield surpassing 1.41% to reach its highest level since July. However, the surge in yields did not appear to scare off equity investors, nor did it weigh heavily on some of the tech and growth stocks that had been hit by the rate hike earlier this year. The Nasdaq closed more than 1% higher

According to Mark Haefele, chief investment officer of UBS Global Wealth Management, given the still low Treasury yields observed during the pandemic, “Only a rise in real yields of more than 50%. [basis points] over three months would likely weigh on equity returns, particularly in emerging markets. ”

Other pundits also pointed to the Fed’s more constructive view of the recovery as a primary factor helping to send stocks on a weekend rally.

“A hawkish Fed was surprisingly well received by the stock markets as it was seen as a confirmation of the economy’s continued strength and ‘substantial progress’ in recovering from the COVID shock,” wrote Anu Gaggar, investment strategist Global for Commonwealth Financial Network, in an email.

“While we are far from the end of [quantitative easing] and rates close to zero, the wind seems to be starting to change, ”Gaggar added. “Until now, the market has greeted bad news as good news, but a market responding to signs of an economy capable of standing without the crutches of monetary policy is a refreshing change.”

6:27 p.m. ET Thursday: Stock futures hold their gains

Here are the main movements on the markets as of Thursday evening:

  • S&P 500 Futures Contracts (ES = F): +3.25 points (+ 0.07%), at 4,441.25

  • Dow Futures (YM = F): +15 points (+ 0.04%), at 34,659.00

  • Nasdaq Futures (NQ = F): +2.5 points (+ 0.02%) to 15,306.00

Trader Jonathan Mueller works in his stand on the floor of the New York Stock Exchange on Tuesday, September 21, 2021. Stocks open slightly higher on Wall Street, making up for some of the ground they lost in a pullback brutal a day earlier. (AP Photo / Richard Drew)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter



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