Dow Futures Test Record Highs On Vaccine Rollout, Stimulus Bets; Bitcoin Passes $23,000

The Thursday Market Minute

  • Global stocks test fresh record highs amid vaccine rollouts and stimulus hopes.
  • The FDA meets to consider Moderna’s Emergency Use Authorization request as the Pfizer/BioNTech vaccine is rolled out in Britain and the United States.
  • Congress reportedly nears a $900 billion aid package that could see checks of between $600 to $700 sent out before the end of the year.
  • The Fed pledges to keep rates near record lows for at least three years, while continuing to buy $120 billion in bonds each month until ‘substantial’ progress is made on jobs and inflation.
  • The dollar slumps to an early 2018 low of 89.955 against its global currency peers and bitcoin tops $23,000. 
  • U.S. equity futures point to a firmer open on Wall Street ahead of Weekly jobless claims data at 8:30 am Eastern time.

Wall Street traded higher Thursday, with the three major benchmarks eyeing fresh all-time highs, as markets continue to rally amid the rollout of coronavirus vaccines in the U.S. and Europe and hopes of a stimulus agreement breakthrough in Washington. 

With the Pfizer  (PFE) – Get Report/BioNTech  (BNTX) – Get Report vaccine being administered in Britain and the United States, and Moderna  (MRNA) – Get Report likely to receive emergency use approval from the FDA within days, investors are seeing light at the end of the tunnel of a year-long pandemic that has killed nearly 1.7 million people and decimated the global economy. 

Federal Reserve Chairman Jerome Powell, in fact, put the vaccine rollout at the forefront of monetary policy yesterday, telling reporters that he expects activity to pick-up notably in the middle of next year as herd immunity takes hold.

His pledge to continue buying $120 billion in bonds each month, while keeping interest rates at near zero percent for at least the next three years, added to the market’s optimism, as did reports of a potential $900 billion stimulus deal from lawmakers in Washington and the Friday deadline for funding federal agencies looms.

The need for further support, given that stocks are closing in on fresh record highs, was underscored yesterday by a collapse in November retail sales and the likelihood of another 700,000 to 800,000 Americans filing for unemployment benefits last week amid lockdown and stay-at-home orders closed businesses around the country.

Equities tend to reflect economic conditions several months in the future, however, and are poised to hit all-time highs again Thursday, with contracts tied to the Dow Jones Industrial Average indicating an opening bell gain of 135 points and those linked to the S&P 500 priced for a 22 point advance. 

Nasdaq Composite futures, meanwhile, suggest a xx point gain for the tech-focused benchmark, which has gained a staggering 45% so far this year. 

In fact, one of the only global assets to top the Nasdaq’s meteoric rise has been Bitcoin, which has soared more than 200% since early Spring and traded at just over $23,000 overnight as day-traders and professional fund managers alike pile into the cryptocurrency market.

In traditional currency trading, the prospect of extended bond purchases from the Fed, as well as record low rates and deeper public spending, pushed the dollar to fresh two-and-a-half year lows overnight, with the dollar index tumbling 0.55% to trade at 89.941 against a basket of its global peers.

The move down helped support commodity prices, which are rising in advance of next year’s potential economic rebound, with oil leading the charge. Crude prices hit the highest levels since early March in early European trading after the U.S. Energy Department said domestic stock fell by 3.1 million barrels over the week ending on December 11.

WTI futures for January delivery jumped 28 cents to $48.10 per barrel, while Brent crude for February was marked 30 cents higher at $51.38 per barrel.

In Europe, stocks hit a 10-month high, even as the euro traded at the highest levels since March of 2018 against the U.S. dollar and coronavirus infections continue to rise — with French President Emmanuel Macron testing positive this morning — in the world’s biggest economic bloc. 

Germany’s trade-sensitive index rose 0.8% in early trading in Frankfurt while Britain’s FTSE 100 was little-changed from last night’s close as the pound traded near 1.36 against the beaten-down greenback.

Asia stocks, too, posted solid Thursday gains, with the Nikkei 225 in Tokyo rising 0.18% to 26,806.67 points and the region-wide MSCI ex-Japan benchmark gaining 0.55% heading into the final hours of trading.