January 22, 2021
Markets PAID

Stock Futures Signal Continued Rally, Tech Recovery

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Global markets and U.S. stock futures rose Thursday as investors looked past the political unrest to focus instead on prospects for higher government spending.

Futures tied to the Dow Jones Industrial Average gained 0.6%, suggesting the index of blue-chip stocks will extend a rally that pushed it to a record closing high Wednesday. Contracts tied to the benchmark S&P 500 index advanced 0.6%.

Futures on the Nasdaq-100 Index gained 0.7%, suggesting that giant technology stocks may recoup some of their losses. The sector took a beating Wednesday when investors pushed into other stocks that are more dependent on economic growth.

Investor sentiment was boosted by Democrat Jon Ossoff’s victory in the second of two Senate runoff races, which was called shortly after U.S. markets closed Wednesday. The two Georgia seats handed Democrats control of the Senate, raising the prospect of additional stimulus for the U.S. economy after President-elect
Joe Biden

takes office.

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Pro-Trump rioters stormed the Capitol Wednesday, forcing lawmakers to evacuate during a joint session of Congress to ratify the electoral votes of the presidential election.

The Wall Street Journal Interactive Edition

A joint session of Congress early Thursday morning also affirmed Mr. Biden’s defeat of President Trump, who committed to an orderly transition of power.

“The expectation is now we’ve avoided a gridlock, and more fiscal support will be available to the economy through this coming year, rather than less,” said

Christopher Smart,
chief global strategist at Barings.

Investors were largely unmoved Wednesday by violent scenes in Washington, where a mob of Mr.

Trump’s
supporters stormed the Capitol in an attempt to derail the ratification of Mr. Biden’s victory.

“It’s not going to affect the transition of power, and as long as that is the case, I think investors will ignore it,” said Edward Smith, head of asset allocation research at U.K. investment firm Rathbone Brothers.

Investors are finding relief in the fact that the Democrats’ majority in both houses of Congress will be thin, according to Mr. Smith. This will empower moderates in the party and make sweeping tax rises and other policies that would erode corporate profitability less likely, he said.

A selloff in U.S. Treasurys extended, with the yield on the 10-year note rising to 1.054% after surging in the previous session. Bond yields rise as prices fall. The 10-year yield climbed past 1% for the first time since March on Wednesday, on bets for increased U.S. stimulus.

The dollar stabilized, holding close to lows last reached in 2018. The WSJ Dollar Index, which tracks the greenback against a basket of currencies, ticked up 0.2%.

“At the end of the day, the confidence in the institutions is still there,” said George Efstathopoulos, multiasset fund manager at Fidelity International.

Investors will later gain fresh insight into the U.S. economy’s fitful recovery with a flurry of data releases expected Thursday. Weekly labor-market data, due at 8:30 a.m. ET, are expected to show jobless claims rose to 800,000 in the week ended Jan. 2 as virus cases continued to surge. The Institute for Supply Management’s gauge of services-sector activity, due at 10 a.m., will likely show it fell slightly, but remained in growth territory in December.

Overseas markets also advanced. The regionwide Stoxx Europe 600 index rose 0.2%, led higher by shares of energy and mining companies whose fortunes are tied to those of the global economy.

In China, the Shanghai Composite Index added 0.7% to close at its highest in more than five years. South Korea’s Kospi rose 2.1% to a fresh record high.

Hong Kong’s Hang Seng slipped 0.5%, however. Shares of China’s big three telecommunications operators, listed in Hong Kong, tumbled after the New York Stock Exchange reversed course for the second time in days and said it would proceed with a planned delisting.
China Mobile,
China Unicom
and
China Telecom
dropped between 7% and 11%.

Also weighing on the Hong Kong market, shares in
Alibaba Group
lost 3.9% and Tencent fell 4.7%. The losses came after The Wall Street Journal reported that U.S. officials are considering prohibiting Americans from investing in the two technology giants.

“Overall, the markets are looking at the positives,” said

Ken Wong,
a portfolio manager at Eastspring Investments. He said investors were looking beyond the unrest in Washington, as well as other issues such as the potential tax implications of Democratic control of Congress.

Write to Joe Wallace at Joe.Wallace@wsj.com and Xie Yu at Yu.Xie@wsj.com