Stock futures pointed to a higher Wednesday morning after another record-setting day for Wall Street, with the S&P 500 and Dow each rising to all-time highs on the back of the U.S. Senate passage of a major infrastructure bill. A new report on consumer price inflation also matched expectations, helping assuage concerns over fast-rising prices during the recovery.
Contracts on the S&P 500 were flat to slightly higher. A day earlier, the blue-chip index and the Dow each both reached record intraday and closing highs, with shares of industrials and materials companies, as well as other names closely tied to the economic recovery leading the way higher.
U.S. West Texas intermediate crude oil futures fell more than 1% after CNBC reported the White House had requested that OPEC and its allies further increase production in order to meet rising demand for energy during the recovery.
Elsewhere, developments out of Washington helped fuel the latest move to new highs in equities, with the Senate passing a more than $1 trillion infrastructure plan with bipartisan support. The plan – which includes a number of Biden administration priorities to help revamp roads and bridges nationwide as well as boost environmental and broadband initiatives — next heads to the U.S. House of Representatives.
Investors clung to optimism that the bill will ultimately be signed into law, providing yet another infusion of government support into the recovering economy.
“Realistically, what an infrastructure bill is going to mean is additional spending into the economy. Just like the stimulus has helped the economy for the last year, that’s more money that can be going into the economy and helping businesses get through the slump they have been in previously,” Courtney Dominguez, senior wealth advisor for Payne Capital Management, told Yahoo Finance.”Generally speaking, the economy looks to be on good footing, and this is only going to be an added benefit on top of that.”
As a number of pundits have pointed out, data on the U.S. recovery has come in mostly strongly, especially in terms of the demand side of the economy. The National Federation of Independent Business’ small business optimism survey released Tuesday reflected a record high level of job openings for July, tracking with the pick-up in labor activity reflected in last week’s “official” government jobs report.
According to some strategists, this ongoing recovery in economic activity bodes well for cyclical and value stocks in the near-term. However, the specter of a growth deceleration in the coming months also makes the case for a balance approach with higher-growth stock names.
“You saw this strong jobs report on Friday, you saw the 10-year [Treasury yield] move up, and you immediately saw the pop in financials. Going forward, you’re going to continue to see those strong numbers, and I think that will continue to help the net interest margins of financials stocks,” Stephanie Lang, Homrich Berg Principal and chief investment officer, told Yahoo Finance. “As we move into later this year, I think the defensives are going to be strong, because I think there’s going to be more volatility and the earnings [comparisons over last year] are going to be tougher. We really like to have a barbell strategy where you have some of the cyclical names like financials, but have a barbell with tech names that are more secular growers and have acted more defensively.”
Meanwhile, earnings continued to trickle in from major corporations. Shares of Coinbase (COIN) advanced in early trading after the largest U.S. cryptocurrency platform reported second-quarter earnings and revenue that handily exceeded expectations, with both user growth and trading volumes surging despite crypto price declines late this spring. On Wednesday, companies including Bumble (BMBL), eBay (EBAY) and Sonos (SONO) are set to post quarterly results.
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8:39 a.m. ET: Consumer price index rises 0.5% monthly pace in July, matching estimates
Consumer prices rose at a pace consistent with consensus estimates in July, the Labor Department reported Wednesday. Still, however, the rate of increases was well above pre-pandemic levels as reopening-related demand spikes and base effects continue to occur.
The consumer price index (CPI) rose 0.5% in July compared to June, according to the government’s latest monthly report. This was in-line with estimates, and pulled back from the 0.9% monthly rise from last month. The print came as price increases categories in some major categories cooled. Used car and truck prices, for instance, pulled back to post an only 0.2% monthly increase, down from the 10.5% surge posted in June.
Excluding food and energy prices, the CPI rose at 0.3% month-on-month, coming in a tick below the 0.4% rise expected.
Over last year, however, consumer prices unexpectedly held at the same rate as in June, coming in at 5.4% to match last month’s print as the highest level since 2008. Consensus economists were looking for a 5.3% rise.
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7:10 a.m. ET Wednesday: Stock futures point to a mixed open
Here’s where markets were trading Wednesday morning:
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S&P 500 futures (ES=F): -2.5 points (-0.06%) at 4,427.5
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Dow futures (YM=F): +19 points (+0.05%) to 35,174.00
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Nasdaq futures (NQ=F): -22 points (-0.15%) to 15,022.50
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Crude (CL=F): -$0.79 (-1.16%) to $67.50 a barrel
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Gold (GC=F): +$6.40 (+0.37%) to $1,738.10 per ounce
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10-year Treasury (^TNX): +2.4 bps to yield 1.366%
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6:17 p.m. ET Tuesday: Stock futures edge higher
Here’s where markets were trading Tuesday evening:
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S&P 500 futures (ES=F): -0.5 points (-0.01%) at 4,429.5
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Dow futures (YM=F): +3 points (+0.01%) to 35,158.00
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Nasdaq futures (NQ=F): -0.75 points (-0.00%) to 15,043.75
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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