Stock futures opened slightly higher Wednesday evening, adding to gains after the major equity indexes closed out a strong second quarter and first half of the year.
Contracts on the S&P 500 edged higher after the index logged yet another record closing high during the regular trading day. The blue-chip index has gained 14.4% for the year to date, and ended June with a more than 2% gain for a fifth straight monthly rise. A batch of strong economic data helped propel equities higher during Wednesday's session, with private payrolls growing by a better-than-expected 692,000 in June and pointing to a potentially strong print in the Labor Department's "official" June jobs report on Friday.
For the April through June quarter, the information technology, real estate and communication services sectors outperformed amid a broad-based rotation back into technology and growth stocks. The rotation coincided with lessened concerns over inflationary pressures, as investors considered signs that price increases would be only transitory in the early stages of the recovery. The energy and financial sectors, however, are still the best performers for the year-to-date.
"I still think energy and financials are a decent place to be," Shawn Snyder, Citi U.S. Wealth Management head of investment strategy, told Yahoo Finance. "And I think that even as we've seen the 10-year Treasury yield decline over the past three months as inflation expectations came down a bit, I still think odds are yields will move higher over time ... and those sectors that are sensitive to interest rates, which are energy and financials, I still think make sense."
"What we're looking at is moving a little bit away from the U.S. and more towards areas that haven't recovered fully," he added, noting as an example that U.K. equities trade at a significant discount to many of those in the U.S. "In the U.S., I would say airlines, leisure and hospitality, have not fully recovered yet compared to where they were prior to this pandemic. So I think there's still room to run there."
Other strategists also suggested that the tug-of-war between cyclical and growth stocks will likely continue into the second half of the year.
"One day, it's growth is in favor. The next day, value's in favor. A lot of that is being driven by interest rates and thoughts on the Fed," Chris Hodge, chief investment officer of Cornerstone Wealth, told Yahoo Finance. "There's certainly no question as we hit the summer slump, the dog days, so to say, that markets have not yet really decided on what the next move is going to be."
"We're passing through the easiest compares in modern history, comparing against the COVID shutdowns. So unfortunately, we think a lot of the easy money has been made in 2021," he added. "Going forward, the path is going to be a little more difficult, as we think we're in for some growth deceleration and, hopefully, some leveling off on the inflation front as well."
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6:15 p.m. ET Wednesday: Stock futures add to gains
Here's where markets were trading into the overnight session on Wednesday:
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S&P 500 futures (ES=F): 4,294.75, +6.25 points (+0.15%)
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Dow futures (YM=F): 34,457.00, +58 points (+0.17%)
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Nasdaq futures (NQ=F): 14,558.50, +9.50 points (+0.07%)
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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July 01, 2021 at 05:15AM
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