Dow futures pull back after another round of records

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By William Watts

Stock-index futures fell slightly Tuesday, signaling a modest pullback a day after major benchmarks scored another round of all-time highs on optimism over the potential for another large round of aid spending.

Stocks saw moderate gains Monday, pushing the Dow Jones Industrial Average to its first record close since Jan. 20 (link), while the S&P 500 and Nasdaq Composite each scored a third straight record finish. The small-cap Russell 2000 led gains, rising 2.5% to its own record close.

The equities rally is due for a breather after surging to a series of new highs in recent days helped by good earnings reports, progress in Congress on President Joe Biden’s fiscal relief plan, and the accelerating rollout of coronavirus vaccines, along with declining new case numbers, analysts said.

In One Chart:The stock market is echoing 2009-10 — and that means a pullback could be near, analysts warn (link)

The main focus remains on prospects for another large round of aid spending with President Joe Biden and congressional Democrats preparing to push a package through the Senate via a process known as budget reconciliation that would require a simple majority. That likely means a package closer in size to Biden’s $1.9 trillion proposal than previously expected.

The focus on additional spending and optimism over vaccine rollouts is seen as a positive for cyclical stocks tied more closely to the economic cycle.

“The brighter outlook for U.S. economic activity likely explains why value and ‘old economy’ stocks are spearheading this latest charge higher, while the stay-at-home tech heavyweights like Amazon, Facebook and Apple have fallen behind,” said Marios Hadjikyriacos, investment analyst at XM, in a note.

Energy shares were among Monday’s market leaders as oil futures continued to push higher, with Brent crude , the global benchmark, topping the $60-a-barrel level for the first time in over a year.

Upbeat expectations around the economic outlook aren’t universal, however.

The optimism index compiled by the U.S. National Federation of Independent Business fell 0.9 in January to 95.0 (link), hitting the lowest level since the onset of the pandemic last spring

Data on U.S. December job openings is due at 10 a.m. Eastern.

St. Louis Federal Reserve Bank President James Bullard is scheduled to deliver remarks at noon Eastern.

-William Watts; 415-439-6400;


(END) Dow Jones Newswires

02-09-21 0816ET

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