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29 Mar 2021
3 min read

US Equity Futures Decline After S&P500’s Friday Record High

US Equity Futures Decline After S&P500’s Friday Record High

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Key Takeaways

  • US futures lower on renewed inflation fears and broad risk-off sentiment
  • Joe Biden to unveil details on his infrastructure plan on Wednesday

Futures tied to the major benchmark indexes are showing a negative score in the pre-market hours ahead of Monday’s trading session. The dip follows a strong rally on Friday which led the broad-based S&P500 index to a record close after a rally in the final hour of the session. S&P500 futures this morning indicate a lower open by about 0.40%. Dow Jones futures are flashing red, down by 0.40%, and Nasdaq futures are also down by roughly 0.50%.

All benchmarks are trading in negative territory as the uncertainty around inflation and higher interest rates continue to shake the markets. On Friday, all three major indexes rallied to their highs in the final minutes of the session with the S&P500 notching a fresh all-time record high. The S&P500 closed at 3,974 points, with a daily gain of 1.66%, or 65.02 points. The Dow Jones Industrial Average also ended in the green, higher by 1.39%, or 453.40 points, to a close of 33,072.88. The tech-focused Nasdaq Composite finished with a gain of 1.24%, or 161.05 points, to close at 13,138.72.

The broad-based rally on Friday was led by technology and financial stocks, which shared buying momentum as investors weighed the economic reopening and the trailing tech sector. Market participants are now betting heavily that the economic rebound will lead to the strongest recovery with the fastest economic growth since 1984.

The trading week promises to kick off with heightened volatility as the quarter is coming to a close. Additionally, the week will be shorter with Friday off due to the Easter holiday. For that reason, investors could go through a portfolio rebalancing prompted by the recent swift rise in bond yields. Even though the stock market remains closed on Good Friday, the March jobs report is still set to arrive that morning.

Biden Administration to Unveil Infrastructure Plan

This week the market also expects to hear more from President Joe Biden on the infrastructure plan with the hefty price tag of $3tn. The multi-trillion-dollar long-term plan is set to be unveiled on Wednesday when President Biden travels to Pittsburgh. White House press secretary Jen Psaki already announced that the President plans to introduce two separate packages. The first should cover infrastructure such as roads, bridges, railways, airports. The second one will be directed towards health and family care and will include funding for education, paid family leave, universal pre-kindergarten, among other measures. Later in the week, Mr Biden will also present his 2022 budget.

Republican Senators have already opposed Joe Biden’s new economic plan. In order for the plan to pass, Democrats would need to use the same procedure of reconciliation as they did for the approval of the $1.9tn stimulus bill. That could prove more difficult this time around. Keeping Democrats united will be challenging because moderates are already voicing concerns over the rising deficit while progressives demand higher spending.

Justice Democrats, a progressive political action committee, are calling for a climate change initiative worth north of $2tn. The Sunrise Movement, a political organization focused on climate change, demands a $10tn bill to be spent on infrastructure and climate change efforts over the next ten years.

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