U.S. stock futures suggested the market would continue to move higher on Wednesday, following a big rally in the previous session that was fueled by a growing belief the worst may be over for the world’s largest economy.
Dow Jones Industrial Average rose 188 points, or 0.7%. S&P 500 futures were up 0.6% while Nasdaq-100 futures traded 0.5% higher. The indicated gains would lead the major averages to a four-day winning streak.
Amazon and Apple each rose 0.9% in the premarket while Netflix climbed 0.7%. IBM and 3M were both up more than 1% and were among the best-performing Dow components in early trading.
Stocks were also helped by a Bloomberg News report that the Trump administration is preparing a near $1 trillion infrastructure bill. Positive trial results showed dexamethasone — a widely available drug — can help critically ill coronavirus patients, which also boosted equities. The treatment reportedly reduced Covid-19 deaths in hospitalized patients by up to one third.
“It’s hard to keep a ‘well supported’ stock market down,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “Against a backdrop of widespread caution after a swift 7% decline in the recent days, the stock market was simultaneously bombarded by major pillars of support.”
Federal Reserve chairman Jerome Powell’s semiannual two-day testimony to the Senate banking committee started on Tuesday. The Federal Reserve’s announcement to beef up monetary stimulus with direct purchases of corporate bonds on Monday boosted sentiment.
To be sure, concerns about the coronavirus linger. Multiple reports said Beijing will shut down all schools amid a resurgence in coronavirus cases. In the U.S., more than 2.1 million cases have been confirmed.
“The attitude of many Americans seems to be that they are done with the coronavirus, but the coronavirus is not done with us,” Marc Odo, portfolio manager at Swan Global Investments, told CNBC. “The large run up in the market was predicated upon everything going right and a return to normal in short order. However, the regional spikes in infections is challenging that optimism.”
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