U.S. stock futures climbed Wednesday ahead of U.S. inflation data, suggesting that the major indexes will resume this month’s rally.
Futures tied to the S&P 500 rose 0.4%, while Dow Jones Industrial Average futures gained 0.3%. Contracts on the technology-heavy Nasdaq-100 advanced 0.5%. Both the S&P 500 and the Dow closed lower on Tuesday after notching record highs earlier in the week.
Stocks have pushed higher this month, with the benchmark S&P 500 notching its eighth record close of the year on Monday. Investors are betting that President Biden’s $1.9 trillion stimulus package will help bolster the economy while vaccinations help reduce Covid-19 fatalities. Investor sentiment has also been buoyed by companies’ quarterly results that have largely proved to be better than expected.
“As long as earnings estimates are going up, stocks are going up,” said Andrew Slimmon, a managing director and portfolio manager at Morgan Stanley Investment Management. “The magnitude of the earnings beats we have seen are so great because earnings have been way underestimated.”
In off-hours trading, ride-hailing firm Lyft rose 12% after posting a narrower annual loss, suggesting the company is moving toward profitability.
rose 3.5% after the social-media company said it added users through the holiday period.
fell 5.4% after it said that fiscal second-quarter revenue and profit declined.
Coca-Cola and General Motors are among the companies set to release earnings ahead of the opening bell Wednesday, while
is scheduled to release its results after the market closes.
U.S. inflation data, an important indicator of the health of the economy, are due to be released at 8:30 a.m. ET. Economists are forecasting steady but slow gains for January.
“These will be given undue attention because we have gone through an unprecedented period,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. “There are definitely some inflationary signals in the background, but the inflation numbers we have seen recently have been pretty soft.”
Investors are concerned about whether rebounding consumer demand and another sizable stimulus package could see inflation rise steeply, or push the fiscal deficit too high, Mr. Kassam added.
“No one is worried about the size of the stimulus package, as long as it is quite big,” he said. “The challenges are more on whether it is too big and whether you can have too much of a good thing,” he said.
Comments from Federal Reserve Chairman
scheduled for 2 p.m. ET, are also likely to be closely scrutinized for any hints on the health of the economy and futures moves on monetary policy.
U.S. Treasury yields, which move inversely to the price, ticked up to 1.160% after settling at 1.156% on Tuesday.
Overseas, the Stoxx Europe 600 edged up 0.2%.
In China, the Shanghai Composite advanced 1.4% to close at its highest level since August 2015. This was its last trading day before the Lunar New Year holidays. Distiller Kweichow Moutai, the biggest stock in the index, leapt 5.9% to a record closing high.
Optimism about China’s economy, rising corporate earnings, and global vaccine rollouts have helped lift market sentiment recently, said Wei Wei Chua, a portfolio manager at Mirae Asset Global Investments.
A rush of new mutual-fund launches, plus an increase in individual investors buying stocks through mobile apps, had also injected fresh money into the market, Mr. Chua added. “It is a positive feedback loop and people don’t really want to miss out when the markets are doing well,” he said.
Hong Kong’s Hang Seng Index rose 1.9% by the close of trading, while Japan’s Nikkei 225 gained 0.2%.
—Joanne Chiu contributed to this article.
Write to Will Horner at William.Horner@wsj.com
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