Vladimir Zernov
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U.S. Stock Market

Stocks Gain Ground Amid Stimulus Hopes

S&P 500 futures are gaining ground in premarket trading as traders remain optimistic about the new coronavirus aid package.

U.S. Treasury Secretary Janet Yellen has recently stated that Americans who earn $60,000 per year should get $1,400 stimulus checks proposed by U.S. President Joe Biden. Yellen’s support for the stimulus package serves as an additional positive catalyst for the market.

On Friday, Non Farm Payrolls report indicated that the economy added 49,000 jobs in January while the Unemployment Rate report showed that Unemployment Rate declined from 6.7% in December to 6.3% in January.

While the reports showed that the situation in the job market has stabilzed, the economy clearly needs an additional round of stimulus to support employment and consumer activity. The Congress has recently approved a budget plan which will allow to pass the aid bill without Republican support. Thus, the new round of stimulus may be introduced in the upcoming weeks which is bullish for stocks.


Treasury Yields Move To Yearly Highs

The sell-off in the bond market continues as traders expect that the new round of economic stimulus will push inflation to higher levels. As a result, the yield of 30-year Treasuries is trying to settle above the psychologically important 2.00% level.

Previously, the yield of 30-year Treasuries was at the current levels back in February 2020, right before the acute phase of the coronavirus crisis.

Rising yields may provide additional support to the U.S. dollar and put more pressure on precious metals like gold and silver which offer no yield, but it remains to be seen whether the current move in the bond market will be sustainable.

WTI Oil Settled Above The $57 Level

WTI oil is trying to settle above $57.50 while Brent oil is testing the $60 level as traders bet that crude inventories will continue to decline amid rising demand and lower production due to Saudi Arabia’s decision to reduce output by 1 million barrels per day (bpd) in February and March.

The recent Baker Hughes Rig Count report showed that the number of U.S. rigs drilling for oil increased by 4 to 299, but the market ignored the steady increase in the number of U.S. drilling rigs as it has repeatedly failed to push U.S. oil production to higher levels.

The continuation of the rally in the oil market will likely provide significant support to oil-related equities at the beginning of today’s trading session.

For a look at all of today’s economic events, check out our economic calendar.

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