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Dow Futures Higher, Nasdaq Leads Wall Street; Treasury Yields Dip Below 1.7%

Weekly jobless claims, as well as Friday's payroll report, could dictate trading on Wall Street as investors kick off the second quarter in an optimistic mood.

The Thursday Market Minute

  • Global stocks start second quarter with solid gains, as investors look to a post-pandemic rebound powered by government stimulus, ultra-low interest rates and ample central bank liquidity.
  • President Joe Biden unveils a new $2.3 trillion infrastructure plan with spending spread over eight years, but early indications suggest Congress will need convincing.
  • Benchmark 10-year note yields ease to 1.698% following weekly jobless claims, while the dollar index drifts to 93.125.
  • Oil prices extend 25% quarter gains ahead of OPEC meeting in Vienna that is likely to rollover the cartel's production cuts.
  • CDC data shows 54.6 million Americans have now been fully vaccinated against the coronavirus, with more than 150.2 million doses administered as of Tuesday.
  • U.S. equity futures suggest a firmer open on Wall Street following softer-than-expected weekly jobless claims data for the week ending March 27.

U.S. equity futures edged higher Thursday as investors moved into the first trading day of the second quarter buoyed by expectations of a solid post-pandemic rebound, with stocks at all-time highs and inflation concerns lurking just around the corner. 

The re-opening narrative received mixt support, however, from weekly jobless claims data that showed a higher-than-expected 719,000 Americans filing for new unemployment benefits. Last week's reading was the lowest since the pandemic began in March, and yesterday's National Employment report from ADP indicated that 517,000 new private sector jobs were created this month, the best pace of growth since September.

Re-opening bets, in fact, helped the Dow Jones Industrial Average outpace gains for both the S&P 500  -- which hit an an all-time high of 3,994.41 points yesterday -- over the first quarter with a 7.76% first advance, lead by energy, banking and commodity-linked stocks that benefited from a broader shift into so-called value plays.

Inflation prospects go hand-in-hand with growth bets, however, and the so-called breakeven rate between five-year Treasury bonds and five-year inflation protected securities, a key market gauge for consumer price increases, passed a 2008 high of 2.5% again Wednesday -- firmly ahead of the Fed's 2% inflation target -- while a similar reading for 10-year 'breakevens' hit the highest levels since 2013.

President Joe Biden's ambitious $2.3 trillion infrastructure ambition isn't likely to cool those concerns any time soon, but the eight year trajectory of his soon-to-be-proposed bill, and the resistance it's likely to face on both side of the aisle in Congress, looks to have tamed its affect on markets heading into the Thursday session.

Benchmark 10-year note yields eased to 1.698% following their biggest quarterly increase in five years, allowing tech and other interest-rate sensitive stocks to build modest pre-market gains heading into what is likely to be a quiet trading session ahead of the Good Friday Easter observance. 

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Futures contracts tied to the Dow suggest a 100 point gain, while those linked to the S&P 500, which rose 5.8% for the quarter, are priced for a 22 point bump.

Nasdaq Composite futures look set to lead gains on the first trading day of the second quarter, however, with contracts indicating a 190 point opening bell advance, thanks in part to pre-market moves for Apple  (AAPL) - Get Apple Inc. Report, Tesla  (TSLA) - Get Tesla Inc. Report and Micron  (MU) - Get Micron Technology Inc. Report and a relatively quiet overnight session for Treasury bonds. 

Micron shares leapt nearly 4%, in fact, with similar gains for rival Western Digital WDC, after the Wall Street Journal reported the chipmaking pair may be individually looking to purchase Japan-based flash memory group Kioxia Holdings Corp.

In Europe, the strongest manufacturing PMI reading on record for the month of March painting an optimistic picture of the region's post-pandemic potential, although news of a fresh national lockdown in France reminded investors of the region's struggles in both taming the spread of the virus and extending its sputtering vaccine rollout.

The Stoxx 600 was marked 0.54% higher in early trading, paced by a 0.77% gain for the FTSE 100 in London and a 0.4% advance for the DAX performance in Germany.

Inflation concerns were noted, as well, in the region's flash estimate for consumer price increase jumped to 1.3% in March, and looks to be moving steadily towards the ECB's preferred 'just below 2%' target. 

Oil prices were also on the move, with WTI crude rising $1.3 per barrel to $60.46 -- extending the 25% surge recorded over the first three months of the year -- ahead of today's OPEC meeting in Vienna that is expected to agree another one-month extension of the cartel's production cuts. 

Overnight in Asia, Japan's Nikkei 225 kicked-off the new fiscal year with a 0.72% gain that pegged the benchmark at 29,388.87 points while the region-wide MSCI ex-Japan index was last seen 1.23% higher on the session thanks to solid gains in China and South Korea.