Stock futures traded little changed Wednesday evening after a record-setting day on Wall Street.
Contracts on the S&P 500 hugged the flat line, after the blue-chip index reached a record intraday high during the regular session, and closed out its best monthly gain since November. Nasdaq futures edged up after technology stocks lifted the index higher by more than 1.5%. In late trading, shares of electric-vehicle stocks including Workhorse Group (WKHS) and Plug Power (PLUG) increased as President Joe Biden discussed the details of his more than $2 trillion infrastructure plan, which will include building out half a million EV charging stations.
Thursday’s session will mark the first of the second quarter and of April. Historically, the month has been fortuitous for equities. Stocks have closed April higher in 14 out of the past 15 years, and since 1950 it has been the second best month for stocks, according to an analysis by Ryan Detrick, LPL Financial chief market strategist.
Heading into the second quarter, stock leadership has tilted strongly in favor of cyclical and value stocks, which have earnings most closely tethered to the broad-based reopening of business across the U.S. economy. The energy, financials and industrials sectors have outperformed in the S&P 500 for the year-to-date, while last year’s winners – like the information technology and communication services sectors – have lagged by comparison. Many analysts suggested this trend would continue in the coming months.
“I think we’re going to see more of the same in terms of market leadership. This is an environment in which the economy is likely to accelerate,” Kristina Hooper, Invesco chief global market strategist, told Yahoo Finance. “And I think that means that we’ll see continued outperformance of areas like energy, like financials, like consumer discretionary, material, industrials — those areas of the stock market that are most sensitive to the economy.”
Others made similar assertions.
“I think the really big news is that we’re at a really big tipping point right now. We’re out of the pandemic, or getting out of the pandemic. There’s a gargantuan change in how our economy’s going to be run with the stimulus plan as well as the Build Back Better plan,” Stephen Dover, Franklin Templeton head of equities, told Yahoo Finance, referring to President Joe Biden’s recently unveiled, multi-trillion-dollar infrastructure proposal. “So I think investors are going to have to look very differently looking forward than they have been looking in the past.”
The hefty spending plan Biden proposed this week to revitalize roads, bridges, factories, broadband and address other concerns including climate change is also set to be a key focus for equity investors going forward, with the increased government spending poised to come alongside tax policy changes in order to fund it. Biden’s plan includes lifting the corporate tax rate, with additional taxes on capital gains and individual top marginal rates likely to be unveiled later.
“The larger impact to markets will be whether or not the corporate tax rate is raised to 28% – or somewhere in between there and the current 21% level – and whether or not a global minimum tax on corporations can be established,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in an email. “It’s likely that the stock market can withstand a hike in the corporate tax rate to 25%, but unclear how much room there is above that if stocks are going to keep moving higher between now and year end.”
Here’s where markets were trading Wednesday evening:
S&P 500 futures (ES=F): 3,967.25, -0.15 points, or roughly unchanged
Dow futures (YM=F): 32,911.00, +13 points or 0.04%
Nasdaq futures (NQ=F): 13,100.00, +10.25 points or 0.08%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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