Stock futures pointed to a higher open Thursday morning as investors digested a host of corporate earnings results and considered policymakers’ next moves to support the still virus-stricken economy.
Contracts on the S&P 500 rose 0.3%, reversing some declines after the index closed lower for a second straight session on Wednesday. Dow and Nasdaq futures also traded higher.
Over the past several weeks, investors have watched as a growing list of companies across various industries handily beat earnings expectations. S&P 500 companies are on track to grow aggregate earnings per share by about 1.7% for the fourth quarter, according to an analysis by FactSet’s John Butters. Most analysts had been expecting another quarter of year-over-year declines heading into earnings season. Even still, companies that beat on both revenue and earnings have not been rewarded for their performance, and instead lagged the market by an average of about 0.5% in the period just before and after their reports, Butters added.
The lackluster reactions to earnings add to other unorthodox trends seen elsewhere in markets as of late.
“Record low yields in fixed income, low expected returns in large-cap equities, and $23 trillion in policy stimulus (with more on the way) leave investors with no good reasons to be bearish but few inexpensive ways to be bullish,” Bank of America strategists including Jared Woodard wrote in a note Wednesday.
“Some are turning to alternatives. Crowd-sourced trading, the rise of cryptocurrencies and Special Purpose Acquisition Companies (SPACs), the lack of guidance in both foreign and domestic markets, and record savings gluts are all evidence of low investor trust in conventional methods and desperation for returns in a stagnant world,” they added.
Even still, U.S. stocks have buoyed near record highs, in large part thanks to fiscal and monetary policy support. Federal Reserve Chair Jerome Powell said in a speech Wednesday that the central bank “will not tighten policy” until a robust economic recovery has taken place and the labor market rebound extends across a broad cross-section of the population, lifting those hardest-hit by the pandemic. And while he acknowledged that inflation readings may start to launch higher later this year when compared to last year, he said he does not expect to see a large or sustained increase in prices across core categories.
And Sen. Ron Wyden (D., Ore.), chairman of the Senate Finance Committee, said that Powell’s “assessment reiterates the need for the strongest possible benefits package in our COVID relief bill,” including at least $400 in weekly federal unemployment payments and six months of other enhanced jobless benefits. Congressional committees have been working this week to draft legislation for the next coronavirus relief package.
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7:30 a.m. ET: Kraft Heinz will sell nuts business to Hormel for $3.35 billion; 4Q results top estimates
Kraft Heinz (KHC) posted fourth-quarter results that handily topped estimates, as consumers mostly eating at home helped stoke retail sales and offset ongoing declines in sales to restaurants.
Fourth-quarter organic revenue grew 6%, reversing course after sliding 2.2% in the same quarter last year. Consensus analysts were looking for growth of 5.1%, according to Bloomberg data. Adjusted earnings of 80 cents per share were better than the 73 cents expected.
The company also said it agreed to sell its nuts business to peer food giant Hormel (HRL) in a $3.35 billion cash deal. The products included under this transaction include the Planters and Corn Nuts brands.
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7:19 a.m. ET Thursday: Stock futures point to a higher open, holding onto overnight gains
Here’s where markets were trading Thursday ahead of the opening bell:
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S&P 500 futures (ES=F): 3,913.5, up 10.5 points or 0.27%
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Dow futures (YM=F): 31,398.00, up 70 points or 0.22%
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Nasdaq futures (NQ=F): 13,699.50, up 56.00 points or 0.41%
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Crude (CL=F): -$0.46 (-0.78%) to $58.22 a barrel
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Gold (GC=F): +$0.80 (+0.04%) to $1,843.50 per ounce
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10-year Treasury (^TNX): -0.9 bps to yield 1.143%
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6:09 p.m. ET Wednesday: Stock futures tick higher
Here’s where markets were trading Wednesday as overnight trading kicked off:
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S&P 500 futures (ES=F): 3,905.25, up 2.25 points or 0.06%
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Dow futures (YM=F): 31,355.00, up 27 points or 0.09%
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Nasdaq futures (NQ=F): 13,652.50, up 9.00 points or 0.07%
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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