Futures contracts tied to the Dow Jones Industrial Average implied an opening gain of about 100 points. S&P 500 futures and Nasdaq 100 futures also traded in positive territory.
The S&P 500 closed at a record high on Friday and posted its fifth straight positive session for the first time since August. The Dow is also on its longest daily winning streak since August, while the Nasdaq Composite registered its fourth positive session in five on Friday. The tech-heavy index also closed at a record high.
“We are still very much in a bull market at the early stages of an economic recovery that’s gaining momentum,” Michael Wilson, chief U.S. equity strategist at Morgan Stanley, said in a note to clients Sunday. “We continue to recommend stocks with the most upside to an improving economic backdrop as the vaccines are distributed and normal activities resume,” he added.
All three major averages finished the week in the green, with each posting its best week since November as fears of the short-squeeze in a handful of stocks leading to broader market contagion subsided. The Russell 2000, meanwhile, is on its longest daily winning streak since May, and gained 7.7% last week for its best weekly performance since June.
“Equities continue to grind higher and are likely keying in on the 4000 level for the S&P 500,” said JC O’Hara, chief market technician at MKM Partners. “Trends continue to be positive … The severity of the upslope should continue to attract fast money but the longer term, patient money, will be kept on the sidelines until a pullback develops,” he added.
The Senate and House each passed a budget resolution on Friday, starting the reconciliation process that would allow President Joe Biden’s $1.9 trillion rescue package to get through the Democratic-held Senate with a simple majority.
The package includes $1,400 stimulus checks, supplemental jobless benefits and Covid-19 vaccine and testing funds.
Treasury Secretary Janet Yellen said Sunday that if Biden’s stimulus plan is passed the U.S. could return to full employment by 2022.
“There’s absolutely no reason why we should suffer through a long slow recovery,” Yellen said during an interview on CNN’s “State of the Union.” “I would expect that if this package is passed that we would get back to full employment next year.”
Meanwhile, another busy week of earnings is on deck with 78 S&P 500 components set to report quarterly results. Among the names on deck are Cisco, Twitter, Yelp, Uber, MGM, Mattel, GM, Coca-Cola and Disney.
On the coronavirus front, more contagious variants continue to spread throughout the U.S. On Friday Virginia health officials reported the state’s first case of the strain first identified in South Africa. On Sunday South Africa halted distribution of AstraZeneca’s vaccine given its minimal efficacy against the strain first identified in the country.
In the U.S. the vaccine rollout continues. “Boots on the ground are becoming increasingly efficient at distributing the vaccine, and positive trial data boosted hope that a third vaccine soon may be made available for emergency use,” noted Ryan Detrick, chief market strategist for LPL Financial. “Obviously, as a larger proportion of the population receives their vaccinations, economic activity can pick up and hiring in hard-hit service jobs can resume.”