Dow Today – US STOCKS-Stimulus hopes set to lift S&P 500 to near record highs
* Futures up: Dow 0.33%, S&P 0.44%, Nasdaq 0.48% (Adds comments, updates prices)
By Sagarika Jaisinghani
Aug 2 (Reuters) – The S&P 500 was set to open near record highs on Monday as a $1 trillion U.S. infrastructure bill raised hopes of more fiscal stimulus, while investors turned to a deluge of macroeconomic data this week to gauge the pace of a domestic rebound.
The Senate on Sunday unveiled the bipartisan plan to invest in roads, bridges, ports, high-speed internet and other infrastructure, with some predicting the chamber could pass this week the largest public works legislation in decades.
Shares of infrastructure-related stocks including Caterpillar Inc inched higher in premarket trading.
Trillions of dollars in monetary and fiscal stimulus have lifted Wall Street’s main indexes to record highs, while strong second-quarter corporate earnings led the S&P 500 to end Friday with its sixth monthly gain in a row.
Signs of a steady economic recovery have also boosted demand for so-called value stocks, including industrials , energy and financials, but the recent spread of the Delta coronavirus variant has raised concerns of another hit to growth.
“I don’t think investors are worried about broader macroeconomic numbers even if they are showing signs of a slowdown; the concern lies in the risk of reopening being on pause because of the spread of the Delta variant,” said Dennis Dick, a proprietary trader at Bright Trading LLC.
“People know if things do go wrong, the Federal Reserve will add further support.”
After the Fed stuck to a dovish policy last week, focus this week will be on business activity data on Monday and Wednesday, while on Friday, the Labor Department will issue its monthly employment report.
Economists expect nonfarm payrolls to have risen 900,000 last month, compared with 850,000 in June.
At 8:18 a.m. ET, Dow e-minis were up 114 points, or 0.33%, S&P 500 e-minis were up 19.25 points, or 0.44%, and Nasdaq 100 e-minis were up 71.5 points, or 0.48%.
In a sign of global M&A activity picking up, Square Inc , the payments firm of Twitter Inc co-founder Jack Dorsey, said it would purchase Australian buy now, pay later pioneer Afterpay Ltd for $29 billion.
Afterpay’s Australia-listed stock surged 18.8%, while Square’s U.S.-listed shares fell 4.4%.
Meanwhile, a rebound in corporate profits and a recent drop in bond yields are helping to moderate U.S. equity valuations, bolstering the case further for owning stocks.
After mixed quarterly reports from technology behemoths last week, in focus this week are earnings reports from companies such as Eli Lilly and Co, CVS Health Corp and General Motors Co.
Shares of ride hailing firms Uber Technologies Inc and Lyft Inc rose about 1% ahead of their second-quarter results this week, where investors will look for comments on how an ongoing driver shortage and the Delta variant were clouding the outlook for the year.
(Reporting by Sagarika Jaisinghani and Shashank Nayar in Bengaluru; Editing by Shounak Dasgupta)