Stock futures take a breather following recent rally
Rotating to stocks tied to economy a ‘sensible’ long-term move: Mohamed El-Erian
While the rotation to stocks tied to the economy ‘makes sense,’ investors should ‘make sure that they are investing in companies that can survive the journey,’ Mohamed El-Erian, chief economic adviser at Allianz, says.
U.S. equity futures are trading lower ahead of the release of the latest jobless claims report.
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The major futures indexes suggest a decline of 0.6% when trading begins on Thursday.
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Excitement over news of potentially effective vaccines for COVID-19 has been tempered by concerns over the logistical challenges of ensuring access to billions of people. Meanwhile, caseloads are rising, leading governments to re-instate restrictions on business and other activities to battle the pandemic.
CORONAVIRUS VACCINE TRUMPS DIVIDED GOVERNMENT IN TURBOCHARGING MARKETS: GOLDMAN SACHS
Before the opening bell on Wall Street, the Labor Department is expected to say the number of claims for unemployment benefits declined by 16,000 last week to 735,000. That would be the lowest since March 14.
At the same time the Bureau of Labor Statistics is expected to say that consumer prices inched up 0.1% in October, half the monthly increase in September. On a year/year basis watch for prices to increase 1.3%, down slightly from September’s 1.4% rise.
In Asia, Tokyo's Nikkei 225 index gained 0.7% despite a report that machinery orders fell in September, suggesting weakness in corporate investment.
The mood was more somber elsewhere in Asia. Hong Kong's Hang Seng index fell 0.3% and China's Shanghai Composite index declined 0.1% .
On Wednesday, the Dow Jones Industrial Average edged 0.1% lower, to 29,397.63, dragged back by weaker prices for companies like American Express and Walt Disney, that had shot up this week after news of a potentially successful vaccine sent travel, entertainment and tourism companies surging.
|I:DJI||DOW JONES AVERAGES||29397.63||-23.29||-0.08%|
|I:COMP||NASDAQ COMPOSITE INDEX||11786.430896||+232.57||+2.01%|
The Dow declined shortly after news crossed that New York would put restrictions on bars, restaurants and gyms as COVID-19 infections rose in the state.
The S&P 500 rose 0.8%, to 3,572.66 and is just 8 points below the record high it set in September. The technology-heavy Nasdaq composite rose 2%, to 11,786.43.
WALL STREET YEAR-END BONUS PAYMENTS TAKE HIT
While several significant risks remain for Wall Street broadly, the optimistic case that investors are embracing is that one or more coronavirus vaccines could help corral the virus by the second half of next year, encouraging people to return to life as it was before the pandemic.
Democrat Joe Biden has clinched enough electoral votes to win the White House, clearing some of the uncertainty that weighed on the market through the vicious campaign. Even though President Trump has refused to concede, investors are ignoring his complaints so far. They’re instead working on the assumption that a split Washington under Biden could keep tax rates low while offering more steady and predictable policies.
Those expected results helped push strategists at Goldman Sachs to raise their forecast for the S&P 500 at the end of this year to 3,700 from 3,600. That would imply another 4.4% climb from Tuesday’s closing level. They expect it to rally another 16% through 2021. But the biggest driver for that is the hope for a return to normal life, rather than what happens in Washington.
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In other trading, benchmark U.S. crude oil picked up 28 cents to $41.73 per barrel in electronic trading on the New York Mercantile Exchange. It climbed 9 cents to $41.45 on Wednesday.
Brent crude, the international standard, added 28 cents to $44.08 per barrel.
The Associated Press contributed to this report.
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