Stock Futures Stable After Dow, S&P 500 Closes At Record

U.S. stock index futures were little changed in overnight trading on Wednesday after the S&P 500 and Dow Jones Industrial Average closed at new highs.

Futures contracts linked to the Dow Jones Industrial Average edged up, while S&P 500 futures were unchanged. Futures on the Nasdaq 100 were slightly lower.

On Wednesday, in regular trading, the S&P 500 rose 0.14% to its 70th year-end record. This is the second most record-breaking close for the benchmark in a calendar year, just behind the 77 closing records of 1995.

The Dow Jones rose 90 points, or 0.25%, to also close at a record high – its first since November. The benchmark of 30 stocks had its sixth consecutive positive session. The Nasdaq Composite, however, was down 0.1%. Chip inventories were under pressure, with AMD, Xilinx and Nvidia all falling by at least 1%.

Travel-related stocks also fell amid lingering concerns over Covid-19, with the NYSE Arca Airline index falling 2.5%.

On the flip side, a number of consumer stocks hit all-time highs during the session, including Domino’s Pizza, McDonald’s, Yum Brands, Costco and Procter & Gamble.

The three main averages are in the green for December. The S&P and Dow Jones are on track for a second positive month in the past three, while the Nasdaq Composite is on track for a third consecutive month of gains.

Wednesday’s bullish action for the Dow Jones and S&P continued a historically strong period for stocks, which has been dubbed the “Santa’s Gathering.” The S&P 500 has gained during the period – the last five trading days of the year followed by the first two sessions in January – 78.5% of the time since 1928, according to Bank of America.

“Santa has been good to investors this holiday season, and we expect another year of positive returns in 2022,” said Scott Wren, senior global markets strategist at Wells Fargo Investment Institute.

With only two trading days remaining in 2021, the large averages are also on course to end the year in the green. The S&P and the Dow Jones are up 27.6% and 19.2% respectively. The Nasdaq gained 22.3%, while the Russell 2000 is up 13.9%.

“2021 has been a great year for the equity markets,” said Anu Gaggar, global investment strategist for Commonwealth Financial Network. “Between federal stimulus measures to keep the economy going, the Fed’s accommodative monetary policy keeping markets liquidity and interest rates low, and continued medical improvement leading to surprising growth, markets have been in the best of all possible worlds, ”she added.

Looking ahead, Gaggar said 2022 performance depends on earnings and market valuations.

The gradual rise in Treasury yields could prove to be a hindrance for 2022, especially in growth-oriented sectors of the market. The 10-year US Treasury yield rose above 1.5% on Wednesday.

“We expect interest rates to rise slightly in 2022 based on short-term inflation expectations above historical trends and improving growth expectations once the impact of the variants of COVID-19 will fade away, “said Lawrence Gillum, fixed income strategist for LPL Financial. “Our year-end 2022 forecast for the 10-year Treasury yield is 1.75-2.00%.”

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