U.S. stock-index futures edged higher, signaling optimism over the strength of the U.S. economy will help the S&P 500 Index extend a record.
S&P 500 contracts expiring in September gained 0.1 percent to 2,179 at 9:04 a.m. in New York, after the underlying benchmark rallied to a fresh peak on Friday amid better-than-forecast jobs data. The Nasdaq Composite Index also reached a record for the first time in a year, with the gauge capping its longest streak of weekly gains since November amid a strong earnings season for technology shares. Dow Jones Industrial Average futures added 22 points to 18,476 today, and Nasdaq 100 Index contracts also gained.
“Overall, the U.S. economy seems to be reasonably robust for now,” said Frances Hudson, an Edinburgh-based strategist at Standard Life Investments. Her firm manages about 253 billion pounds ($331 billion). “The jobs report was good news — we had one negative report two months ago, then everything else seems to be pulling in the same direction. The global growth picture is not very robust, so though we see this talk of the health of the U.S. economy, the Fed is not entirely focused on the U.S.”
Confidence in the U.S. economy grew after payrolls Friday beat estimates for a second month in July, shoring up sentiment after a weak May reading. While traders have brought forward their bets for a Federal Reserve interest-rate increase, policy makers are still expected to only move gradually when they resume raising borrowing costs. The first month with at least even odds of a hike is March, compared with September before the jobs data.
Speculation that central banks will remain supportive of markets and better-than-estimated corporate results have boosted equities to all-time highs, after brief but sharp losses spurred by the U.K.’s vote to leave the European Union. The S&P 500 has rallied 19 percent since reaching a 22-month low in February, while a measure of volatility posted its longest stretch of weekly declines in almost eight years. The benchmark’s price-earnings ratio last month climbed above 20 for the first time since 2009.
With the earnings season more than three-quarters of the way through, about 78 percent of firms that have reported have beaten profit predictions and 56 percent have topped sales projections. Analysts have tempered their estimates for second-quarter net income at S&P 500 members to a 2.7 percent decline, from a 5.8 percent drop less than a month ago. News Corp., Walt Disney Co. and Macy’s Inc. are among those reporting this week.
Shares moving on corporate news included Mattress Firm Holding Corp., which more than doubled after Steinhoff International Holdings NV agreed to buy it for about $2.4 billion. Competitor Select Comfort Corp. added 7 percent.
Tyson Foods Inc. increased 2.5 percent after its quarterly profit topped estimates and the largest U.S. meat processor forecast full-year earnings that also exceeded analysts’ predictions.
Delta Air Lines Inc. slipped 1.1 percent after a computer-system failure grounded all of the carrier’s flights across the U.S. Dean Foods Co. fell 3.1 percent after posting a weaker-than-expected profit as sales volumes slipped.