Stock futures drifted near record levels on Wednesday morning, with investors optimism over rebounding corporate earnings helping counterbalance ongoing concerns over the coronavirus.
Contracts on the S&P 500 ticked down a day after the index reached its record closing high. The Nasdaq was also on track for a lower open, while Dow futures rose.
Shares of ride-hailing company Lyft gained after the company unexpectedly delivered adjusted EBITDA profitability for the first time since going public in 2019 with a pickup in ridership during the reopening helping to fuel results. Oil and gas company Occidental Petroleum also posted adjusted earnings as demand improved.
Estimates-topping results from these and a myriad of other global US companies have helped buoy stocks even as jitters around the spread of Delta variant and concerns about regulatory crackdown in China remained lingered. However, the Treasury markets reflect some of these concerns, with the benchmark 10 - year yield returning below 1.2% and holding at the lowest levels since mid-July.
With it being delta variant, that has been a driver of rates moving lower. And certainly China has been a headwind. We do think those are largely driven out of the U.S. so when it comes to domestic factors, domestic growth really looks pretty solid, said Stephanie Roth, JPMorgan private bank senior markets economist, Yahoo Finance. We expect over the long run domestic factors will win out and rates should move higher.
In terms of equities, Tactically, cyclicals should do fairly well, so here we're bar-belling cyclicals and tech and we think rates should definitely trend higher over the next 12 months, Roth added.
More clues on the economic growth trajectory for the U.S. are expected to emerge in the coming days with a slew of reports on the labor market due over the course of the rest of the week. ADP's monthly employment report is expected to show private payrolls grew by a solid 683,000 in July, and only slightly below the gain of June of 692,000. The July Labor Department employment report is expected to reflect a mild acceleration in payroll gains, with a pick-up in hiring and the return of more workers to the labor market helping to alleviate some of the labor scarcities rampant across industries.