Dow Futures 105 Pts Higher; Fed Meeting Looms Large

By Peter Nurse

Investing.com - U.S. stocks are seen opening higher Monday, continuing last week’s rally as investors await Wednesday's highly anticipated Federal Reserve meeting.

At 7:05 AM ET (1205 GMT), the Dow futures contract was up 105 points, or 0.3%, S&P 500 futures traded 6 points, or 0.2%, higher, and Nasdaq 100 futures climbed 25 points, or 0.2%.

Equity markets rose strongly last week, with the Dow Jones Industrial Average rising 4%, its best weekly performance since November last year, S&P 500 gaining 2.6% and the Nasdaq Composite gaining 3%. 

Helping the mood has been the expectation of healthy growth going forward, buoyed by extraordinary monetary and fiscal stimulus, particularly after President Joe Biden signed his massive $1.9 trillion Covid relief package into law late last week.

A fly in the ointment has been the recent jump in bond yields on rising inflationary concerns, which has challenged growth stocks in recent weeks to the benefit of the more cyclical sectors.

The yield of the U.S. 10-year Treasury hit its highest level in more than a year on Friday, trading above 1.64%. It currently trades at 1.61%.

This brings this week’s Federal Reserve two-day meeting, its second of the year, firmly into focus. The central bank is not expected to take action on interest rates, but investors will be watching closely for changes to its economic projections as well as any commentary regarding the selloff in the Treasury markets.

Meanwhile the U.S. vaccination program continues to gather pace, with President Biden stating last week the country will have enough vaccines for every adult by the end of May, two months earlier than previously expected.

This points towards a relative early reopening of the economy, with some states such as Texas already lifting mask-wearing and other restrictions. Air traffic data registered more passengers passing through U.S. airports on Friday than any day since March last year.

The news in Europe has been less encouraging, with Covid-19 cases rising again and Italy planning a third national lockdown over the Easter holiday.

In corporate news, GenMark (NASDAQ:GNMK) will be in the spotlight after Swiss pharmaceutical giant Roche (SIX:RO) announced it will buy the U.S.-based maker of molecular diagnostic tests in a $1.8 billion deal.

Oil prices climbed Monday, with the international benchmark Brent heading towards $70 a barrel on signs of strong Chinese economic growth, pointing to more demand from the world’s largest importer of oil.

U.S. crude futures traded 0.2% higher at $65.72 a barrel, while the Brent contract rose 0.1% to $69.31, not far removed from the 13-month high seen last week.  

Elsewhere, gold futures rose 0.5% to $1,727.90/oz, while EUR/USD traded 0.2% lower at 1.1930.