Inventory futures rise to begin buying and selling in August after S&P posts sixth consecutive month of earnings
US stock futures rose Monday as investors prepared for the first day of trading in August.
Dow Jones Industrial average futures rose 93 points, or 0.3%. S&P 500 futures gained 0.4% and Nasdaq 100 futures gained 0.5%. The S&P 500 and Dow are less than 1% off new all-time highs.
Stocks continued to shake off concerns about the Delta variant of Covid, and stocks that would benefit most from a sustained economic rebound led gains in Monday’s pre-trading session.
Carnival Corp. gained 3% in pre-trading. Big banks like Morgan Stanley and Bank of America were higher. Airline stocks were mostly higher.
“We believe the reopening and rebound trend is on track and we continue to see upside potential for stocks,” wrote Mark Haefele, UBS’s chief investment officer, Global Wealth Management. “We expect the S&P 500 to climb to around 4,650 by June next year, up from 4,395 now. But we are seeing the biggest uptrend in cyclical parts of the market including energy, financials and Japanese stocks.”
The Senate finalized the text of a bipartisan infrastructure law, which also strengthened optimism on Monday. The bill provides for $ 550 billion in new spending over five years. This is on top of the previously approved funding of around $ 450 billion.
Caterpillar shares were up 1% in the pre-trading session.
The S&P 500 posted its sixth month of gains in July, despite heightened volatility amid concerns over economic recovery amid the spreading Delta-Covid variant. It’s the benchmark’s best monthly winning streak since 2018. The Nasdaq Composite and Dow Jones Industrial Average rose 1.2% and 1.3% respectively in July, while the broad S&P 500 rose just under 2.3% last month % increased.
According to the latest CDC shows, the US has recorded an average of more than 72,000 new Covid cases per day in the last 7 days, values not since February this year. That said, stocks were still trading near all-time highs last week, despite heightened concerns about the Delta variant.
“Ultimately, two things drive the stock market: 1) earnings and 2) multiples, and until COVID (or China) begins to negatively impact either or both of these metrics, stocks can remain resilient,” Tom Essaye, founder of Sevens Report, said in a note.
Inflation worries also plagued the market, but a key inflation indicator on Friday showed lower price pressure than feared. The core price index of private consumption expenditure rose by 3.5% in June compared to the previous year. It marked a sharp acceleration in inflation, but was slightly below the Dow Jones forecast of a 3.6% increase.
Also on Friday, the US gross domestic product accelerated in the second quarter by 6.5% on an annual basis, significantly less than the growth rate of 8.4% expected by the economists surveyed by Dow Jones.
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On the profit front, Amazon fell nearly 7.6% on Friday after the tech giant reported its first quarterly loss of revenue in three years and issued weaker forecasts.
However, an overall strong earnings season continues to provide tailwind for the market. According to FactSet, 88% of the reported S&P 500 companies exceeded EPS estimates. For the second quarter, the S&P 500 is well on its way to posting earnings growth of 85.1%, which would be the best growth rate since 2009, according to FactSet.
The first day of trading in August comes with more big profits. Lyft, Amgen, Uber, CVS Health, General Motors, Roku and Square are all reporting quarterly results this week.
Square shares plunged in early trading after Jack Dorsey’s payment company announced a $ 29 billion all-stock deal to buy Australian installment loan provider Afterpay. Square was 4% off.