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U.S. Stock Futures Rally Ahead of Economic Data

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10/01/2020 | 06:37am EDT

By Caitlin Ostroff

U.S. stock futures rose Thursday, following the S&P 500's best six-month performance since 2009 as central banks' stimulus measures keep markets buoyant.

Futures tied to the S&P 500 gained 0.7%, indicating that the broad market gauge could climb after the New York opening bell. Despite a decline in September, the benchmark is up about 27% over the two quarters ended Wednesday.

Some investors are hopeful that an economic rebound in recent months will have resulted in corporate earnings that beat expectations when companies start reporting third-quarter results later this month. Appetite for risky assets that typically generate higher returns--including stocks--continue to be buoyed by the flood of cheap money unleashed by central banks and governments.

"If you look at the market, it's telling you that we're going to get a recovery next year. I'm convinced we're in a new bull market," said Patrick Spencer, managing director at U.S. investment firm Baird. "Even with the election, behind all that is central banks and liquidity."

Investors continue to assess whether Congress will pass another aid package that would bolster U.S. economic growth ahead of the elections, though such hopes have largely receded in recent weeks.

A renewed burst of optimism this week--prompted by talks between Republican and Democratic leaders--began to fade on Wednesday after the House postponed a vote on a $2.2 trillion package. Democrats are trying to find common ground with the White House on a bipartisan agreement, though they remain far apart on key issues.

"The big wildcard in the U.S. is whether we get more fiscal spending or not," said Gregory Perdon, co-chief investment officer at private bank Arbuthnot Latham. "The political backdrop is just so toxic."

Coronavirus infections are another point of focus. Infection rates in the U.S. have remained elevated for some months, and health-experts have warned that the colder months may bring a new wave of infections. While investors don't expect to see a repeat of the spring's stringent lockdowns, fresh restrictions could threaten recovery in the labor market and weigh on consumer spending, which accounts for more than two-thirds of the U.S. economy.

Data on how many Americans applied for unemployment benefits for the first time through the week ended Sept. 26 is due at 8:30 a.m. ET, and will offer the most timely view on the health of the labor market. The Department of Commerce will also release new figures at 8:30 a.m. showing whether American consumers continued to boost spending in August.

The Institute for Supply Management's September purchasing managers index for manufacturing, due out at 10 a.m., is likely to reflect a strong rebound in factory activity amid a slow global recovery and strong domestic demand for autos, electronics and other goods.

In bond markets, the yield on the benchmark 10-year Treasury ticked up to 0.696%, from 0.677% Wednesday.

Overseas, the pan-continental Stoxx Europe 600 edged up less than 0.1%.

Among European equities, shares in Bayer fell almost 11% after the German chemicals and pharmaceuticals company said the coronavirus pandemic would hit its crop-science business harder than anticipated as prices for various crops fell.

STMicroelectronics rose 6.1% in Milan after the chipmaker raised its 2020 revenue outlook following stronger-than-forecast third-quarter revenue.

https://www.wsj.com/articles/bayer-to-cut-more-costs-as-farm-business-hurts-11601501509

In Asia, the Tokyo Stock Exchange halted all stock trading for Thursday due to a system problem, and said it expects to resume normal trading Friday. Markets in China, Hong Kong and South Korea were closed for a holiday.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

Corrections & Amplifications

This was corrected at 6:15 a.m. ET because the original version incorrectly stated the The yield on 10-year Treasurys ended Tuesday at 0.677%. the yield was 0.677% on Wednesday.

(END) Dow Jones Newswires

10-01-20 0536ET


Stocks mentioned in the article
ChangeLast1st jan.
BAYER AG 0.31% 42.555 Delayed Quote.-41.55%
DJ INDUSTRIAL -2.29% 27685.38 Delayed Quote.-2.99%
NASDAQ 100 -1.61% 11504.518824 Delayed Quote.33.89%
NASDAQ COMP. -1.64% 11358.936824 Delayed Quote.28.71%
S&P 500 -1.86% 3400.97 Delayed Quote.5.27%
STMICROELECTRONICS N.V. -2.24% 27.97 Real-time Quote.16.69%
STOXX EUROPE 600 -1.81% 355.95 Delayed Quote.-12.83%
STOXX EUROPE 600 NR -1.80% 782.94 Delayed Quote.-11.16%
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