By Caitlin Ostroff
U.S. stock futures rose Monday on optimism that talks for additional stimulus are progressing and that the rollout of Covid-19 vaccines could help stem the pandemic.
Futures tied to the S&P 500 ticked up 0.5%, indicating that the broad-market index may edge higher after the New York opening bell. Contracts tied to the Nasdaq-100 Index gained 0.4%.
U.S. lawmakers on Sunday signaled a growing willingness to compromise on the most contentious issues that have held up the passage of a fresh coronavirus-relief package in recent months. Leadership from both parties indicated they might look to passing a narrower spending bill. Investors are betting that a deal will be struck, and the additional spending will help bolster the economic rebound.
"In the U.S., it is all about fiscal policy," said Justin Onuekwusi, head of retail multiasset funds at Legal & General Investment Management. "The markets have priced some of this in and believe it is going to happen."
Pfizer started shipping its Covid-19 vaccine in the U.S., dispatching trucks from a Michigan plant. Inoculations could begin as soon as Monday. That is bolstering optimism that rising infection levels may be checked in coming months, prompting an end to restrictions on social and business activity. An end to lockdowns would improve the outlook for companies whose operations have been disrupted this year by the pandemic.
The vaccine "gives you greater certainty around the earnings numbers for 2021 and 2022 because there is a lesser probability of lockdowns," Mr. Onuekwusi said. "The longer you spend at lower earnings levels, the more companies start to get into trouble because demand isn't there, and then you get this permanent economic scaring."
In bond markets, the yield on the 10-year U.S. Treasury note ticked up to 0.906%, from 0.892% on Friday. Yields rise when bond prices fall.
Overseas, the pan-continental Stoxx Europe 600 rose 0.7%.
The British pound rose 1.3% against the dollar and 1% against the euro. Investors are hopeful that the U.K. and the European Union will strike a trade deal after both sides agreed to continue negotiations past a Sunday deadline. Officials said they were narrowing differences over some of the issues that have bedeviled the talks.
"The fact that the talks are continuing has left a spark of hope that both sides do want to find compromise," said Jane Foley, head of foreign-exchange strategy at Rabobank.
Trading in Asia ended on a mixed note. China's Shanghai Composite Index advanced 0.7% and Japan's Nikkei 225 edged 0.3% higher. South Korea's Kospi declined 0.3%.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
12-14-20 0509ET
