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Stock futures opened near the flat line Tuesday evening after another record-setting day for Wall Street, with the S&P 500 and Dow each rallying to all-time highs on the back of the U.S. Senate passage of a major infrastructure bill.
Contracts on the S&P 500 drifted sideways. Earlier, the blue-chip index and the Dow each both reached record intraday and closing highs, with shares of industrials and materials companies, as well as other names closely tied to the economic recovery leading the way higher. The Nasdaq dipped as technology and growth stocks took a back seat.
Developments out of Washington helped fuel the latest leg higher in equities on Tuesday, with the Senate passing a more than $1 trillion infrastructure plan with bipartisan support. The plan – which includes a number of Biden administration priorities to help revamp roads and bridges nationwide as well as boost environmental and broadband initiatives — next heads to the U.S. House of Representatives.
Investors clung to optimism that the bill will ultimately be signed into law, providing yet another infusion of government support into the recovering economy.
“Realistically, what an infrastructure bill is going to mean is additional spending into the economy. Just like the stimulus has helped the economy for the last year, that’s more money that can be going into the economy and helping businesses get through the slump they have been in previously,” Courtney Dominguez, senior wealth advisor for Payne Capital Management, told Yahoo Finance.”Generally speaking, the economy looks to be on good footing, and this is only going to be an added benefit on top of that.”
As a number of pundits have pointed out, data on the U.S. recovery has come in mostly strongly, especially in terms of the demand side of the economy. The National Federation of Independent Business’ small business optimism survey released Tuesday reflected a record high level of job openings for July, tracking with the pick-up in labor activity reflected in last week’s “official” government jobs report.
According to some strategists, this ongoing recovery in economic activity bodes well for cyclical and value stocks in the near-term. However, the specter of a growth deceleration in the coming months also makes the case for a balance approach with higher-growth stock names.
“You saw this strong jobs report on Friday, you saw the 10-year [Treasury yield] move up, and you immediately saw the pop in financials. Going forward, you’re going to continue to see those strong numbers, and I think that will continue to help the net interest margins of financials stocks,” Stephanie Lang, Homrich Berg Principal and chief investment officer, told Yahoo Finance. “As we move into later this year, I think the defensives are going to be strong, because I think there’s going to be more volatility and the earnings [comparisons over last year] are going to be tougher. We really like to have a barbell strategy where you have some of the cyclical names like financials, but have a barbell with tech names that are more secular growers and have acted more defensively.”
Elsewhere, earnings continued to trickle in from major corporations. Shares of Coinbase (COIN) advanced in late trading after the largest U.S. cryptocurrency platform reported second-quarter earnings and revenue that handily exceeded expectations, with both user growth and trading volumes surging despite crypto price declines late this spring. On Wednesday, companies including Bumble (BMBL), eBay (EBAY) and Sonos (SONO) are set to post quarterly results.
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6:17 p.m. ET Tuesday evening: Stock futures edge higher
Here’s where markets were trading Monday evening:
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S&P 500 futures (ES=F): -0.5 points (-0.01%) at 4,429.5
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Dow futures (YM=F): +3 points (+0.01%) to 35,158.00
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Nasdaq futures (NQ=F): -0.75 points (-0.00%) to 15,043.75
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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