U.S. stock index futures rose on Tuesday as the formal go-ahead for President-elect Joe Biden’s transition to the White House ended weeks of political uncertainty and added to hopes of an economic recovery next year.
Signs that a working COVID-19 vaccine could be available before the end of the year have put the benchmark S&P 500 on course for its best November since 1980 and rekindled demand for cyclical sectors such as industrials and financials after a virus-led crash earlier this year.
Futures linked to the blue-chip Dow jumped 1% in early trading, outperforming Nasdaq 100 futures as investors set up to again rotate out of the technology heavyweights that were seen as safe bets during the recession.
After weeks of legal challenges by the Trump administration to overturn the election result, the U.S. federal agency that must sign off on the presidential transition told Biden on Monday that he can formally begin the hand-over process.
Sentiment was also boosted on Monday on reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary, which could shift the focus heavily toward progressive efforts to tackle growing economic inequality.
By 7:02 a.m. ET, Dow e-minis were up 280 points, or 0.95%, S&P 500 e-minis were up 25 points, or 0.7%, and Nasdaq 100 e-minis were up 36 points, or 0.3%.
BlackRock, the world’s largest asset manager, on Monday upgraded U.S. equities to “overweight”, turning bullish on quality large-cap technology companies and small cap firms that tend to perform well during a cyclical upswing.
Shares of Tesla Inc jumped 4.2% in premarket trading, putting the stock on track to hit $500 billion in market capitalization at the opening bell.
Investor attention will be on consumer confidence data for November due later in the day, although trading volumes are expected to be light in a week shortened by the Thanksgiving holiday on Thursday.
(Reporting by Shriya Ramakrishnan in Bengaluru; editing by Uttaresh.V)