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Nasdaq Futures Surge on Fading Inflation Fears, Lower Treasury Yields

With growth improving, vaccinations accelerating, $1,400 checks in the mail and inflation under control, Wall Street looks ready for another run higher for U.S. stocks.

The Thursday Market Minute

  • Global stocks move higher as inflation concerns fade and growth prospects improve following the formal passing of President Joe Biden's $1.9 trillion COVID relief bill.
  • Benchmark 10-year Treasury bond yields fall to 1.485% following last night's solid auction and tame February inflation data, giving bulls a boost as stocks scale record highs.
  • ECB policy makers pledge to "significantly" increase the pace of its monthly asset purchases, a move that added further downward pressure on U.S. Treasury yields.
  • CDC data shows 95.7 million coronavirus vaccine doses have been administered as of yesterday, with nearly 33 million now fully inoculated.
  • U.S. equity futures suggest a firmer open on Wall Street following a modest decline in weekly jobless claims.

Wall Street futures bounced higher Thursday, with tech stocks leading the charge following an overnight retreat in Treasury bond yields, as tame inflation data and the final approval of President Joe Biden's $1.9 trillion COVID relief bill left the bulls in charge for third consecutive session.

Yesterday's 10-year bond auction, which drew solid foreign demand at a yield of around 1.523%, pushed market interest rates lower in the ensuing hours, allowing the Dow Jones Industrial Average to close above 32,000 for the first time in history. 

Benchmark 10-year notes fell to 1.485% in early New York trading, as well, after the European Central Bank pledged to 'significantly' increase the pace of its monthly asset purchases in order to blunt the rise of market interest rates. 

Investors were also soothed by a softer-than-expected reading for February CPI, which showed core consumer prices rising just 0.1% from the previous month, assuaging fears that the Biden stimulus, surging commodity prices and accelerating vaccine rollouts would kindle faster inflation. 

Now, with fiscal support likely to arrive in American bank accounts as early as next week, and central banks -- including the ECB later today -- maintaining their pledge to keep borrowing costs low and liquidity ample, the mechanics for another bull run in stocks appear to be firmly in place.

Futures contracts tied to the Dow Jones Industrial Average suggest a 105 point opening bell gain on top of last night's record close of 32,297.02 points, while those linked to the S&P 500 are priced for a 28 point advance.

Interest-rate sensitive tech stocks, meanwhile, are set to soar, with futures contracts tied to the Nasdaq Composite index indicating a 245 point jump at the start of trading, lead by solid pre-market gains for Apple  (AAPL)  and Tesla  (TSLA) .

The pullback in Treasury yields hit the dollar hard in overnight trading, with the greenback falling 0.3% to a one-week low of 91.559 against a basket of its global peers.

That helped oil prices make another charge towards the $70 per barrel mark, even though yesterday's data from the Energy Department showed a larger-than-expected 13.1 million increase in domestic crude stocks as refiners came back online follow the February Texas winter storms.

WTI futures contracts for April delivery rose 95 cents to $65.40 per barrel while Brent contracts for May jumped 88 cents to $68.80 per barrel.

European stocks were higher after the ECB policy decision at 7:45 am Eastern time and ahead of President Christine Lagarde's press conference at 8:30 am, with the Stoxx 600 marked 0.36% higher in Frankfurt. Britain's FTSE 100 slipped 0.1% as the pound climbed to 1.3956 against the weakened U.S. dollar.

Overnight in Asia, last night's record run on Wall Street flowed over into regional stocks, with the MSCI ex-Japan index rising 1.8%. A firmer yen, however, capped gains for the Nikkei 225 in Tokyo, which closed 0.6% higher at 29, 211.64 points.