U.S. Futures Rise as GDP Shows Economic Resurgence: Markets Wrap

(Bloomberg) -- U.S. stock-index futures rose after a batch of corporate earnings and economic data showed the American economy gained steam in the first three months of the year.

U.S. gross domestic product growth quickened to a 6.4% annualized rate in the first quarter, according to the Commerce Department. The June contract on Nasdaq 100 Index climbed more than 1%, with S&P 500 futures also gaining. Caterpillar Inc. advanced in premarket trading along with Apple Inc. and Facebook Inc., after all their results vindicated investors’ lofty expectations. The 10-year U.S. Treasury yield headed for the biggest weekly increase since March 5.

While the GDP figures may support the Federal Reserve’s strong assessment of the economy, the central bank is in no mood to halt aggressive support as it looks for even further progress in employment and inflation. Chair Jerome Powell on Wednesday dismissed worries about price surges or anecdotes of labor shortage, implying the central bank is prepared to run the economy hot for a while. President Joe Biden unveiled a $1.8 trillion spending plan targeted at American families, adding to the economic optimism.

“Equities should continue to power higher but there will be bouts of volatility along the way,” Mehvish Ayub, State Street Global Advisors senior investment manager, said on Bloomberg TV. “Yields should continue to trend higher, and this is very much a reflection of better economic prospects so it’s not really a negative for equity markets.”

With their plans, the Fed and Biden have delivered a boost to investor sentiment that had see-sawed in recent days between optimism over a string of robust economic data and caution amid high valuations and speculation about stimulus tapering by year-end.

The Bloomberg Dollar Spot Index was little changed Thursday, on course for the first monthly loss this year. That helped emerging-market stocks and currencies extend their rally, underscoring the risk-on sentiment.

Caterpillar advanced 1.2% in early New York trading, while Apple rose 2.5%. Facebook jumped 8% as it posted sales that dwarfed estimates on the back of a 10% growth in active users. With almost half of the S&P 500 companies having reported results so far, about 88% have either met or beaten expectations.

Merck & Co. slipped 2% after posting earnings below expectations as a surge in Covid-19 deterred many patients from seeking routine care.

In Europe, the benchmark Stoxx 600 gauge moved closer to a record reached earlier in April. Personal-care shares climbed after Unilever delivered a sales beat and announced a share buyback. Oil giants Total SE and Royal Dutch Shell Plc boosted their sector after reporting better-than-forecast profits.

Crude oil extended gains on a confident outlook on demand from OPEC and its allies, despite the threat from India’s Covid-19 crisis. Copper rose for a fifth day. The Bloomberg Commodity Index increased for a ninth day, nearing a three-year high on a closing basis.

These are some of the main moves in markets:

Stocks

• Futures on the S&P 500 rose 0.7% as of 8:41 a.m. New York time
• Futures on the Nasdaq 100 rose 1.1%
• Futures on the Dow Jones Industrial Average rose 0.5%
• The Stoxx Europe 600 rose 0.3%
• The MSCI Emerging Markets Index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.2133
• The British pound rose 0.1% to $1.3954
• The Japanese yen fell 0.3% to 108.93 per dollar

Bonds

• The yield on 10-year Treasuries advanced four basis points to 1.65%
• Germany’s 10-year yield advanced three basis points to -0.20%
• Britain’s 10-year yield advanced four basis points to 0.84%

Commodities

• West Texas Intermediate crude rose 2.1% to $65 a barrel
• Gold futures rose 0.1% to $1,776 an ounce

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