Stock futures opened near the flat line Monday evening after a meandering session during the regular trading day.
Contracts on the S&P 500 ticked up. Earlier, the index ended just a tick below the flatline and was less than half a percent below its all-time high. The Dow also ended lower, while the Nasdaq pushed into positive territory.
Investors this week have been digesting signals from officials over the path forward for monetary and fiscal policies, and what these might suggest for interest rates and corporate earnings. Treasury Secretary Janet Yellen over the weekend said higher interest rates “would actually be a plus for society’s point of view and the Fed’s point of view,” according to an interview with Bloomberg.
Traders, however, have been less convinced. The prospects of higher interest rates could weigh on stock valuations, and additional corporate tax reforms could additionally cut into profits for major companies. Amazon (AMZN) shares fell on Monday following a report that Group of Seven finance ministers were looking to include the e-commerce giant in new global tax proposal. And investors continue to eye negotiations between President Joe Biden and members of Congress for his multi-trillion-dollar infrastructure proposal, which would likely be funded in part through increases to corporate taxes.
Still, some strategists suggested investors’ concerns around the headline concerns of inflation and tax reform may be overblown, given that a solid economic growth backdrop may help outweigh some of the rate or policy headwinds.
“We think investors are getting a bit too pessimistic as far as the outlook given inflation concerns and the increasing tax environment,” Jon Adams, BMO Global Asset Management strategist, told Yahoo Finance. “The backdrop of very supportive policy environment, strengthening economy, and very strong earnings momentum really portend gains for equities as we head toward the second half of the year.”
“We really prefer to position investors toward value with a tilt there, a tilt toward small caps. We think those areas of the equity spectrum perform well in rising inflationary periods,” he added. “We think equities are a pretty good hedge against potentially higher inflation, and we’re not as worried about the corporate tax environment given the headlines over the last week or so.”
On Tuesday, investors are set to receive new economic data in the form of the Labor Department’s Job Openings and Labor Turnover Survey for April. Job openings are expected to have hit a new record high during the month, rising to 8.2 million from March’s 8.123 million, as employers look to bring back an increasing number of workers to keep up with demand during the recovery.
6:10 p.m. ET Monday: Stock futures drift as S&P 500 closes in on record
Here’s where markets were trading Monday evening:
S&P 500 futures (ES=F): 4,226.5, +1 point (+0.02%)
Dow futures (YM=F): 34,610.00, -6 points (-0.02%)
Nasdaq futures (NQ=F): 13,820.5, +16.25 points (+0.12%)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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