Following the massive rally seen in the previous session, stocks may show a lack of direction in early trading on Wednesday. The major index futures are currently turning in a mixed performance, as the Dow futures are up by 95 points but the Nasdaq futures are down by 47.25 points.
Traders may be reluctant to continue making substantial moves following the volatility seen in recent sessions, as the spike on Tuesday followed another sell-off on Monday.
News that Senate leaders and the White House have reached an agreement on a $2 trillion stimulus bill may generate some positive sentiment, although some traders may feel the news was priced into the markets yesterday.
Senate Majority Leader Mitch McConnell, R-Ken., announced the agreement very early this morning, saying he expects the legislation to pass later today.
McConnell described the bill as a “war-time level of investment” in the country, providing financial assistance to individuals and companies amid the ongoing coronavirus pandemic.
The Republican leader’s Democratic counterpart, Senate Minority Leader Chuck Schumer, D-N.Y., also praised the bill, which he said would provide “unemployment compensation on steroids.”
Schumer also claimed the final bill would provide increased oversight of a proposed $500 billion corporate bailout fund, which had been a key sticking point among Democrats.
The Senate could pass the bill as soon as today, although the stimulus package would still need to be approved by the Democrat-controlled House before heading to President Donald Trump’s desk.
In economic news, a report released by the Commerce Department showed an unexpected increase in new orders for U.S. durable goods in the month of February.
The Commerce Department said durable goods orders jumped by 1.2 percent in February after a revised uptick 0.1 percent in January.
Economists had expected durable goods orders to decrease by about 0.8 percent compared to the 0.2 percent dip that had been reported for the previous month.
The unexpected increase in durable goods orders was largely due to a substantial rebounded in orders for transportation equipment, which spiked by 4.6 percent in February after falling by 0.9 percent in January.
However, excluding the jump in orders for transportation equipment, durable goods orders fell by 0.6 percent in February after climbing by 0.6 percent in January. Economists had expected a 0.4 percent drop.
Stocks moved sharply higher over the course of the trading day on Tuesday, partly offsetting the significant weakness seen in recent sessions. After ending the previous session at its worst closing level in over three years, the Dow recorded its biggest percentage gain since 1933.
The major averages saw further upside going into the close, ending the day just off their highs of the session. The Dow skyrocketed 2,112.98 points or 11.3 percent to 20,704.91, the Nasdaq spiked 557.18 points or 8.1 percent to 7,417.86 and the S&P 500 soared 209.93 points or 9.4 percent to 2,447.33.
In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Wednesday. Japan’s Nikkei 225 Index surged up by 8 percent, while Hong Kong’s Hang Seng Index jumped by 3.8 percent.
Meanwhile, the major European markets have turned mixed after an early rally. While the German DAX Index has slumped by 1.4 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.
In commodities trading, crude oil futures are sliding $0.39 to $23.62 a barrel after climbing $0.65 to $24.01 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,630.90, down $29.90 compared to the previous session’s close of $1,660.80. On Tuesday, gold spiked $93.20.
On the currency front, the U.S. dollar is trading at 111.35 yen compared to the 111.23 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0815 compared to yesterday’s $1.0788.
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