Dow Futures Steady as Congress Passes $900 Billion COVID Relief Package

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The Tuesday Market Minute

  • Global stocks mixed, with solid gains in Europe, as U.S. stimulus bill provides final boost to second half rally.
  • U.S. lawmakers agree a $2.3 trillion spending bill that includes $892 billion in coronavirus relief following months of bitter partisan negotiations between Republicans and Democrats.
  • BioNTech CEO says it’s ‘highly likely’ that his company’s vaccine, developed with Pfizer, will induce immune responses to challenge the new strain of the coronavirus identified in the United Kingdom.
  • Apple shares jump in pre-market trading on a report that suggests its looking to launch a self-driving vehicle business powered by ‘next level’ battery technology.
  • U.S. equity futures suggest a mixed open on Wall Street ahead of a final reading of third quarter GDP and PCE data at 8:30 am Eastern time.

U.S. equity futures steadied Tuesday, with the dollar holding on to recent gains, as markets found their footing following headlines suggesting a new coronavirus variant in Europe and got a final holiday boost by the passage of a long-awaited stimulus bill from Congress.

The $2.3 trillion spending bill, agreed after months of contentious and at-times-bitter negotiations between House Democrats and Senate Republicans, will see around $892 billion spend on coronavirus relief efforts, including $350 billion in new money. 

The bill, which also includes $600 checks for most American families and $15 billion in payroll support for the airline sector, will likely add around 2.5 percentage points to next year’s GDP growth, an amount that will keep the world’s biggest economy from suffering a double-dip recession.

News of the passage late Monday combined with a more detailed examination of the news that a new variant of the coronavirus had been identified by researchers in the United Kingdom, gave stocks a bit boost Tuesday, with European markets rising firmly, helped by comments from BioNTech  (BNTX) – Get Report CEO Ugur Sahin, who said it was “highly likely” that his company’s vaccine, developed with Pfizer  (PFE) – Get Report, would induce an immune response to deal with the new strain.

Wall Street is set for a more muted session, however, as investors head into the final full trading days of the year with the major market-moving headlines behind them. Futures contracts tied to the Dow Jones Industrial Average suggest a modest 35 point decline while those linked to the S&P 500, which has gained 14.4% for the year, are priced for a 2 point bump to the upside. Nasdaq futures indicate a 40 point opening bell gain.

Apple  (AAPL) – Get Report shares were active in pre-market trading following a report from Reuters that suggested the world’s biggest tech company is ready to unveil plans for a self-driving car, as well as ‘next level’ battery technology, that could begin manufacturing in 2024.

Apple was marked 2.9% higher in pre-market trading to indicate an opening bell price of $131.90 each.

Peloton Interactive  (PTON) – Get Report was also on the move, rising 7.2% to $154.77 each after it announced the $420 million purchase of equipment-making rival Precor, a move that will add both manufacturing capacity and a larger presence in commercial spaces such as gyms and hotels. 

Elsewhere, oil prices extended declines Tuesday ahead of the American Petroleum Institute’s weekly report on stockpiles later today, with traders citing renewed concerns for energy demand in the wake of European lockdowns and travel restrictions.

WTI crude, which has risen nearly 40% over the past two months, was marked 62 cents lower at $47.35 per barrel while Brent contracts for February delivery, the global benchmark, were seen 54 cents lower at $50.37 per barrel.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.3% higher at 90.29 while benchmark 10-year Treasury note yields eased to 0.931% amid the improved market sentiment.

Overnight in Asia, Japan’s Nikkei 225 echoed Wall Street’s Monday session with a 1.04% slide that pinned the benchmark at 26,436.39 points while the region-wide MSCI ex-Japan index fell 0.82% lower heading into the final hours of trading.