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Dow Futures Point To Record High Open As COVID Recovery Trade Roars; Bitcoin Tests $50,000

With vaccine rollouts accelerating, corporate earnings improving and $1.9 trillion in fresh stimulus on the way, U.S. stocks are pushing to new record highs amid the longest winning streak for global markets in nearly twenty years.

The Tuesday Market Minute

  • Global stocks ride strongest winning streak in 17 years amid renewed recovery hopes and stronger vaccine rollouts.
  • CDC data shows 11.5% of the U.S. population now has at least 1 shot of a COVID vaccine, with new injections hitting a daily pace of 1.2 million - nearly three times the rate of new infections.
  • The U.S. dollar slides to a four-week low against its global peers as risk appetite improves, with benchmark 10-year Treasury yields rising to 1.257%, the highest since March 2020.
  • Bitcoin prices near $50,000 as the world's biggest cryptocurrency adds to its stunning year-to-date gains of more than 70%.
  • U.S. oil prices close in on $60 amid refining shutdowns in Texas triggered by a record cold snap that has tested electricity grids throughout the southwest.
  • U.S. equity futures suggest another record high open on Wall Street ahead of fourth quarter earnings from CVS Health and the New York Empire State Manufacturing index at 8:30 am Eastern Time.

U.S. equity futures powered higher Tuesday, while global stocks extended their longest winning streak in at least 17 years, as investors continue to ride a COVID recovery trade built by accelerating vaccine rollouts and improving corporate earnings.

With President Joe Biden finding support for his $1.9 trillion stimulus bill from a Congress now unfettered by impeachment proceedings, investors are betting that the new injection of cash, alongside a vaccine effort that has partly-inoculated just over 11.5% of the U.S. population, will continue to boost sentiment.

Corporate earnings, as well, have impressed over the final three months of the year, even amid a pullback in consumer spending and uncertainty over the path of the virus heading into the holiday season.

With just over 75% of the S&P 500 reporting, fourth quarter earnings are expected to grow 3.5% from last year to a share-weighted $356.3 billion, according to Refinitiv data, with current quarter earnings looking at a 21.1% improvement from the same period last year.

The healthy backdrop, as well as a weaker U.S. dollar, has stocks on the move again Tuesday, with contracts tied to the Dow Jones Industrial Average indicating a 205 point opening bell gain that would take the index to a fresh-all time high and extend its post-election advance to around 8.4%.

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Futures contracts tied to the S&P 500, which is up 4.7% for the year, are priced for a 20 point gain while those linked to the Nasdaq are indicating a 65 point advance for the tech-focused benchmark.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, is trading at a four-week low of 90.216, even as benchmark 10-year Treasury note yields hold at a March 2020 high of 1.257%. 

The dollar weakness is providing some support to oil prices, as is the shuttering of refining capacity in Texas amid the worst cold snap in nearly a century, with U.S. crude trading just south of the $60 mark in early European dealing.

The greenback's decline is also accentuating another record run for Bitcoin prices, which are testing the $50,000 mark amid a year-to-date gain of nearly 70% for the world's biggest cryptocurrency.

Elsewhere, European stocks tested the highest levels in a year after a stronger-than-expected reading of German business morale and data showing a modestly better reading for GDP over the final months of last year, which included a 5% year-on-year contraction for the 19 countries that use the single currency. 

Overnight in Asia, Japan's Nikkei 225 closed at a thirty-year high of 30,467.75 points, absorbing most of the region's bullish sentiment amid market closures in China linked to the country's Lunar New Year celebrations.