U.S. Stock Futures Edge Up on Earnings, Stimulus Hopes - The Wall Street Journal

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Updated July 23, 2020 7:20 am ET

Stock futures edged higher Thursday amid cautious optimism centering around the prospects for a new U.S. stimulus package and the strength of quarterly results at companies including Tesla and Unilever.

Futures tied to the S&P 500 ticked up 0.4%, indicating that the benchmark stocks gauge could climb for a fifth day after the New York opening bell. The pan-continental Stoxx Europe 600 edged up 0.5%.

Senate Republicans and the White House resolved outstanding issues over a fifth coronavirus relief package on Wednesday. That sets the ground for negotiations with Democrats over the proposed $1 trillion spending package as lawmakers race to reach an agreement ahead of the expiration of enhanced unemployment benefits at the end of the month.

“It’s looking more like they will agree on some type of extension,” said Andrew Hunter, senior U.S. economist at Capital Economics. “The data suggests there is an increasing need for fiscal support over the last few weeks.”

The New York Stock Exchange trading floor Wednesday.
Photo: Colin Ziemer/Associated Press

Positive earnings reports from some of the world’s biggest or most-closely watched companies is also bolstering optimism among investors. Shares in Tesla climbed 5.5% in offhours trading after the Silicon Valley auto maker eked out a profit for the fourth-consecutive quarter, defying Wall Street’s expectations that it would report a loss.

In premarket trading, Twitter shares gained 5% after the social media giant reported strong user growth. Shares in chemicals company Dow rose 1.6% after the company posted better-than-expected earnings, and Danaher shares rose 2.3% after the conglomerate said profit and sales for the second quarter rose.

Among European equities, Unilever rose over 8% in Amsterdam and in London after the Anglo-Dutch consumer products giant unexpectedly reported an increase in profit for the first half of the year. Analysts had forecast a drop in its earnings.

“There are still worries on the horizon, but at the same time, company earnings haven’t been as bad as analysts expected,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. The earnings season has “added some visibility that was missing. So many companies had completely withdrawn guidance, so analysts were reasonably taking some pessimistic scenarios.”

New claims for unemployment benefits, due at 8:30 a.m., will offer fresh insights into the U.S. labor market’s recovery. Applications for unemployment benefits have plateaued in recent weeks at historically high levels after easing for months. The modest easing on unemployment rolls suggests that new layoffs are being offset by hiring and employers recalling workers, though fresh restrictions on business activity in many parts of the country are threatening to stall the recovery.