Stock futures lower as Yellen pushes for more stimulus

by Jonathan Adams
Stock futures

Futures on the DJIA dropped 94 points, while S&P 500 futures and Nasdaq 100 futures both dropped

Stock futures were lower in overnight trading on Thursday after Treasury Secretary Janet Yellen said a big fiscal stimulus is still required for a full recovery in the U.S.

Futures on the Dow Jones Industrial Average dropped 94 points, while S&P 500 futures and Nasdaq 100 futures both dropped.

Yellen told CNBC Thursday that more stimulus is required even as some economic data indicated a swift rebound. She said a $1.9 trillion stimulus deal could help the U.S. get back to full employment in a year.

We think it’s very important to have a big package [that] addresses the pain this has caused – 15 million Americans behind on their rent, 24 million adults and 12 million children who don’t have enough to eat, small businesses failing, Yellen told CNBC’s Sara Eisen during a “Closing Bell” interview.

I think the price of doing too little is much higher than the price of doing something big. We think that the benefits will far outweigh the costs in the longer run, she added.

The stock market’s rally to record levels seems to have faded amid fears of rising rates and higher inflation. The S&P 500 declined for the third consecutive day on Thursday following worse-than-expected data on jobless claims and weak guidance from Walmart.

Many on Wall Street believe that expectations for further fiscal stimulus and a smooth reopening of the economy need to become reality in order for the market to reach higher levels.

A big part of our rationale for additional gains from here is dependent on a continued belief that the major drivers that helped carry the market to current levels will remain intact, Scott Wren, Wells Fargo’s senior global market strategist, said in a note. One of the drivers is “additional stimulus from Congress that will help bridge the gap between now and when vaccines are widely distributed.”

The S&P 500 and the Nasdaq Composite are down 0.5% and 1.6% this week, respectively, on track to break their two-week winning streak. The blue-chip Dow just 0.1% higher this week to date.

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