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Dow Futures Climb on Reports Of $2 Trillion Biden Stimulus, China Trade Data; Weekly Jobless Claims Jump to 965,000

Reports of a $2 trillion stimulus effort from Joe Biden, as well as stronger-than-expected trade data from China, has Wall Street looking at a firmer start to the Thursday trading session.

The Thursday Market Minute

  • Global stocks climb as investors key on Biden stimulus plans, China trade data following historic Trump impeachment.
  • President Elect Biden could unveil a $2 trillion spending plan today that includes direct check payments of $2,000, in an effort to revive the COVID-hit economy.
  • Treasury yields resume climb on the Biden spending plans, while the dollar holds relatively firm in mixed foreign exchange trading.
  • European stocks rise despite accelerating infections and the collapse of Italy's coalition government, pulled higher by US stimulus hopes.
  • Asia stocks lag as new infections in China raise concerns, even as trade data impresses and energy imports surge. 
  • U.S. equity futures suggest a mixed open on Wall Street after weaker-than-expected weekly jobless data and fourth quarter earnings from Delta Air Lines.

U.S. equity futures charged higher Thursday, while Treasury bond yields jumped and the dollar dipped lower, amid reports that President Elect Joe Biden will unveil a $2 trillion stimulus plan later in the day.

Stocks held onto gains, as well, following data showing weekly jobless claims rose by nearly 200,000 over the week ending on January 9 to 965,000, lifting continuing claims to 5.271 million.

The larger-than-expected spending ambition, which must first be approved by the new Congress, could include direct checks of $2,000 to most American citizens and a boost in the minimum wage to $15 an hour. Collectively, the moves would add significant support to U.S. stocks, while at the same time adding trillions more to the nation's swelling debt and annual budget deficit, pressuring bond yields and the U.S. dollar.

The prospect of more spending for an economy that is clearly feeling the affects of rising coronavirus infections, stalled job growth and limp consumer spending looks to offset both the political drama in Washington and grim developments from the pandemic's resurgence in Europe and Asia.

President Donald Trump was impeached for his role in 'incitement of insurrection" by the House of Representatives last night in a 232-197 vote that included ten Republican lawmakers supporting the historic censure.

Proceedings are unlikely to move to the Senate, however, before Tuesday's inauguration of President Elect Biden.

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Stocks futures suggest a solid start to the trading day on Wall Street, with contracts tied to the Dow Jones Industrial Average indicating a 95 point opening bell gain while those linked to the S&P 500 are priced for a 7 point bounce. Nasdaq futures suggest a 3 point opening bell dip.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.05% lower at 90.311 while benchmark 10-year Treasury bond yields rose to 1.105% in overnight trading.

In Europe, rising COVID infections, extended national lockdowns and the collapse of the coalition government in Italy were all offset by the stimulus developments in Washington, with the Stoxx 600 rising 0.5% in early trading, paced by gains for the FTSE 100 in London and the DAX performance index in Germany.

In Asia, the tone was notably different, with China stocks slumping nearly 2% amid the biggest spike in COVID infections in ten months and new lockdowns across some of the country's northern provinces. 

That development offset stronger-than-expected China trade data, which showed an 18.1% increase in December exports and a record global trade surplus of $78 billion, as well as solid gains for tech giants Alibaba  (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report and Tencent triggered by reports that the U.S. Treasury will not move to put those companies on an investment blacklist.

China's losses held down gains for the region-wide MSCI ex-Japan index, which was marked 0.2% higher heading into the final hours of trading, while Japan's Nikkei 225 gained 0.85% to close at a fresh August 1990 high of 28,698.26 points.

Oil prices remained steady in overnight trading, despite data from the Energy Department yesterday showing a bigger-than-expected 3.2 million decline in domestic crude stocks, and figures from China's December trade data showing a 7.3% increase in oil imports.

WTI futures for February delivery gained 3 cents from yesterday's close to trade at $52.94 per barrel while Brent contracts for March delivery, the global benchmark, added 1 cent to trade at $56.04 per barrel.