Stock Futures Rise as Investors Track Stimulus Talks

 Stock Futures Rise as Investors Track Stimulus Talks

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U.S. stock futures edged higher Tuesday as investors cautiously welcomed signs of progress in negotiations over an economic relief package in Washington.

Futures tied to the S&P 500 rose 0.6%, suggesting the benchmark stocks gauge may open higher after falling for a fourth consecutive day on Monday. Futures for the technology-heavy Nasdaq-100 index ticked up 0.5%.

A bipartisan group of lawmakers urged Congressional leaders on Monday to forge ahead with a $748 billion-spending package that would avoid the thorniest issues holding up a deal. Investors have been closely monitoring prospects for a fresh stimulus bill offering support to households and businesses hit by the Covid-19 pandemic. Congress is running out of time to strike a deal before the year-end holiday season.

“It’s very tight,” said Hani Redha, a portfolio manager at PineBridge Investments. “There are decent odds we will still get something in the lame-duck session, which would obviously be a great bridge over to the spring.”

The S&P 500 index is poised for muted gains on Tuesday after four consecutive days of declines.

The S&P 500 index is poised for muted gains on Tuesday after four consecutive days of declines.

Photo: Bruce Cotler/Zuma Press

Stocks have wavered in recent days amid signs that soaring Covid-19 cases and mounting restrictions in the U.S. and Europe are crimping the global economic recovery.

“The market is having to deal with a lot of headwinds,” said Mr. Redha. “Both on the virus itself, the risk of tighter and tighter lockdowns, and uncertainty around any kind of additional stimulus in the U.S.“

“It will be a slower recovery without it,” Mr. Redha said, referring to a new relief package.

Still, many money managers hope that vaccines, coupled with ongoing support from central banks, will allow the rally in stocks and corporate bonds to extend into 2021. Additional support from the U.S. government could offer more buoyancy to markets in what may be a difficult few months as death tolls rise and many businesses continue to suffer.

“The jury’s still a little bit out on exactly what’s going to be passed here,“ said Lyn Graham-Taylor, senior rates strategist at Rabobank. “The U.S. does need some more fiscal stimulus to see it through these winter months.”

Treasury yields are likely to jump if U.S. lawmakers do pass a significant stimulus package, lifting growth, inflation prospects and the supply of bonds, Mr. Graham-Taylor added.

The yield on 10-year Treasury notes edged up to 0.903%, from 0.891% on Monday. Meanwhile the WSJ Dollar Index, which tracks the U.S. currency against a basket of others, rose 0.1%.

Data due to be published at 9:15 a.m. ET are expected to show that industrial production continued to expand in November on the back of strong auto demand. Growth is expected to have slowed last month, and overall output will likely remain below pre-pandemic levels.

In overseas markets, the regionwide Stoxx Europe 600 index edged up 0.2% as gains for auto makers and car-part manufacturers offset losses for retail and health-care stocks.

Shares in
Volkswagen
rose over 5% after the German car maker said late Monday that its supervisory board had agreed to reorganize the management board.

China’s Shanghai Composite Index ended 0.1% lower in a mixed session for Asian stocks. Japan’s Nikkei 225 slipped 0.2%.

China’s economic recovery continued apace in November, data from the National Bureau of Statistics showed, putting the world’s second-largest economy on a stronger footing as it approaches the end of a tumultuous year. Industrial output rose 7% from a year earlier, faster than economists were expecting.

Write to Joe Wallace at Joe.Wallace@wsj.com

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