Stock futures were slightly higher early Friday after Treasury Secretary Janet Yellen said a large Covid bailout is needed for a full US recovery.
Dow Jones Industrial Average futures implied an opening profit of around 55 points. S&P 500 futures gained 0.2% while Nasdaq 100 futures gained 0.3%.
Yellen told CNBC on Thursday after the bell that further stimulus was needed, although some economic data suggested a rapid rebound. She added that a $ 1.9 trillion stimulus deal could help the US get back to full employment in a year.
"We think it's very important to have a big package that addresses the pain it has caused – 15 million Americans behind their rent, 24 million adults and 12 million children who don't have enough to eat, small ones Businesses fail. " Yellen told Sara Eisen from CNBC during a "Closing Bell" interview.
"I think the price of too little is much higher than the price of something big. We believe the benefits will far outweigh the costs in the long run," she added.
The record rally in the equity markets stalled a bit this week as fears of rising interest rates and higher inflation crept in. The S&P 500 fell for a third straight day on Thursday after jobless claims were worse than expected and forecasts were weak from Walmart. The 10-year government bond yield rose to its highest level in nearly a year this week, from just 1.30% on Friday.
Yellen said she doesn't think inflation should be the top concern.
"Inflation has been very low for over a decade, and you know that is a risk, but it is a risk that the Federal Reserve and others have tools to deal with," she said. "The greater risk is scaring people as this pandemic is permanently affecting their lives and livelihoods for life."
Many on Wall Street agree with Yellen that a big incentive is needed and that this package, along with a smooth economic reopening this year, will keep the market rally going.
"A large part of our deliberations for additional profit from here hangs on an ongoing belief that the key drivers that helped bring the market up to date remain intact," said Scott Wren, Wells Fargo's leading global market strategist. in a note. One of the drivers is "an additional incentive from Congress that will help bridge the gap between now and the spread of vaccines."
The House of Representatives will attempt to pass a $ 1.9 trillion coronavirus relief plan before the end of February, spokeswoman Nancy Pelosi said Thursday. Democratic Congress leaders could try to pass a package without a Republican vote.
Applied Materials, which is used to make the equipment used to make semiconductors, delivered a better-than-expected forecast for the second quarter. The share gained 5% in premarket trading. Other chip-related stocks also rose, including Lam Research, AMD, and Nvidia.
The S&P 500 and Nasdaq Composite are down 0.5% and 1.6% respectively this week to break their two-week winning streak. The blue chip Dow has only risen 0.1% for weeks.
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