U.S. stock futures rose as Congressresumed counting electoral votes that will ratify President-elect Joe Biden’s victory, after police cleared out a mob that stormed the Capitol and sent lawmakers scurrying for safety.
Contracts on the S&P 500 advanced 0.5% as of 1:56 p.m. in Tokyo. The U.S. Capitol was declared secure on Wednesday evening in Washington, after law enforcement descended on it to quell chaos that broke out just two weeks before Biden is to be sworn in. Nasdaq 100 contracts climbed 0.7% and those on the Dow Jones Industrial Average were up 0.4%.
The cash market pared a gain that reached 1.5% after Democrats woncontrol of the Senate, possibly unleashing federal spending that will boost the economy. It ended higher by 0.6%, while the Dow Jones Industrial Average hit a record. Nasdaq 100 Index contracts added 0.3%.
Images of unrest in Washington did little to distract investors from their view that the Democratic victories that gave Biden’s party control of Congress promised stronger aid for the economy. That sparked a rotation out of high-flying technology shares into stocks more closely tied to the economy’s performance, like energy producers, banks and travel companies. Ten-year Treasury yields topped 1%
“It really is a sad day for our country but, at the end of the day, 2021 is going to be a year of recovery, it’s going to be a year of reflation, it’s going to be a year where cyclicals outperform,” Michael Contopoulus, director of fixed income at Richard Bernstein Advisors, said in an interview with Bloomberg TV.
Banks in the S&P 500 rose 4.4% Wednesday, the most since Nov. 9 when Pfizer Inc. unveiled positive vaccine results. They benefit from higher Treasury yields that allow them to charge higher lending rates. Materials and energy producers added at least 3% on speculation demand for capital projects will rise, while tech shares fell 1.8% on concern the threat of inflation could make stretched valuations look worse..
U.S. 10-year breakevens — a market gauge of inflation expectations over the next decade — topped 2% this week for the first time since 2018, having gained in each of the last three months. While the pandemic is still raging with the rollout of vaccines in the early stages, the risk is that further signs of inflationary pressure could start prompting bets on Fed rate hikes.
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