US stock index futures rose overnight on Sunday as Wall Street prepared for the busiest week of earnings that will include reports from some of the largest tech companies.
Futures contracts linked to the Dow Jones Industrial Average gained 74 points, indicating a 90-point jump on the open. S&P 500 futures gained 0.33% while Nasdaq 100 futures gained 0.56%.
Stocks ended mixed Friday – the S&P 500 and Dow closed in the red while the Nasdaq Composite closed at a record high – although all three posted gains for the week. The Dow recorded its fifth positive week in six while the S&P recorded its third positive week in four. The Nasdaq rose 4.19% last week for its best week since November and the fifth positive week in six when stocks of big tech names drove the index to new all-time highs.
The surge came as President Joe Biden tried to push through a $ 1.9 trillion stimulus package that many Republicans in Congress are opposed to. The tax subsidy includes, among other things, direct controls for millions of Americans, aid to state and local governments, funding for Covid vaccines and tests, increasing the minimum wage, and improving unemployment benefits.
Lindsey Bell, chief investment strategist at Ally Invest, noted that additional stimulus could lead to a spike in inflation.
"Right now, watch out for signs of inflation as a temporary or longer-term trend. If it's just a quick shock, we can see some market weakness without major action by the Fed," she noted. "On the other hand, persistently high inflation could force the Fed to consider a rate hike and withdraw its market support."
In an inflationary environment, investors should prefer the consumer staples, energy and financial sectors. She added that real estate and gold are among the other assets that can help hedge against inflation.
In the coming week, 13 Dow Components and 111 S&P 500 companies will be showing profits. Quarterly reports on deck include reports from Apple, Microsoft, Netflix, Tesla, McDonald & # 39; s, Honeywell, Caterpillar and Boeing.
According to Bank of America, 73% of the S&P 500 components that have already reported profits have outperformed both sales and EPS. The company said it was similar to last quarter when the number of companies that beat hit a record.
The number of coronavirus cases in the US and abroad continues to rise, but many economists are forecasting a return to growth this year.
"We continue to believe that a reduction in virus risk from mass vaccination coupled with fiscal support for consumer spending will result in a mid-year consumption boom and very strong growth in 2021," Jan Hatzius, chief economist at Goldman Sachs, told a note to customers over the weekend. "We currently forecast GDP growth of + 6.6% for the full year, 2½ percentage points above consensus," he added.
However, the company found that while risks like insufficient tax subsidies are less likely, other risks remain. Hatzius cited consumers who remained more cautious than expected, as well as the development of a vaccine-resistant virus strain as a potential future headwind for the market.
Biden's surgeon general said Sunday the U.S. is trying to keep up with the coronavirus mutation.
"The virus is basically telling us that it will keep changing and we need to be prepared for it," said Dr. Vivek Murthy told ABC News "This Week".
"We need to be number one and do much better genome monitoring so we can identify variants when they arise, and that means we need to double up on public health measures like masking and avoiding indoor gatherings," he added.
Subscribe to CNBC PRO for exclusive insights and analysis as well as live business day programs from around the world.