US stock futures rose Monday, indicating the Dow Jones industrial average, and the S&P 500 will contribute to record highs on the opening.
Dow futures rose 132 points, or 0.4%. The S&P 500 futures were up 0.3%. Nasdaq 100 futures were up 0.3%.
Stocks, which will benefit the most from a quick economic comeback from the pandemic, drove the profits in premarket trading. American Airlines and United Airlines shares rose more than 2% in premarket trading. Boeing, Gap and various energy stats were also higher.
The 10-year US Treasury Department hit its highest level in more than a year on Friday. The reference interest rate for Treasury bills reached 1.642%, its highest level since February 2020.
Yields were a little below these highs early in the trading day, which also helped sentiment for stocks. The 10-year government bond yield fell 2 basis points to 1.61% (one basis point is 0.01%).
Stocks rose last week, with the Dow Jones Industrial Average rising 4% and the S&P 500 rising 2.6%. The S&P 500 and the Dow both closed at record highs on Friday.
The Nasdaq Composite was up 3% last week despite a sell-off on Friday triggered by rising interest rates. The surge in bond yields has challenged growth stocks for the past few weeks, dragging investors into cyclical pockets of the market. The Nasdaq is up less than 1% this month, while the Dow and S&P are up 6% and 3.5%, respectively.
The small-cap benchmark Russell 2000 rose more than 7% last week as investors switched to smaller stocks that benefited from a strong economic comeback.
Last week, investors welcomed the $ 1.9 trillion stimulus package signed by President Joe Biden. The IRS began processing direct payments of $ 1,400 on Friday and checks were written to bank accounts over the weekend. The bill will also allocate nearly $ 20 billion for Covid-19 vaccinations and $ 350 billion for state, local, and tribal government actions.
Investors will prepare for Wednesday when the Federal Reserve will make its rate decision. The bond market in the coming week is likely to orientate itself on the Fed.
The central bank is expected to recognize much better economic growth. Bond professionals are also watching to see if Fed officials will tweak their interest rate outlook, which now doesn’t include rate hikes through 2023.
Goldman Sachs chief economist David Kostin told clients on Sunday that he expects interest rates to continue to rise in the coming months and that investors “continually grapple with fears of economic overheating and a tightening of the Fed.”
On the vaccine front last week, Biden announced that he would instruct states to question all adults for the vaccine by May 1. Biden also made a goal of allowing Americans to meet in person with friends and loved ones in small groups to celebrate the Fourth of July.