Stimulus hopes set to lift S&P 500 to near record highs

[BENGALURU] The S&P 500 was set to open near record highs on Monday as a US$1 trillion US infrastructure bill raised hopes of more fiscal stimulus, while investors turned to a deluge of macroeconomic data this week to gauge the pace of a domestic rebound.

The Senate on Sunday unveiled the bipartisan plan to invest in roads, bridges, ports, high-speed Internet and other infrastructure, with some predicting the chamber could pass this week the largest public-works legislation in decades.

Shares of infrastructure-related stocks including Caterpillar Inc inched higher in premarket trading.

Trillions of dollars in monetary and fiscal stimulus have lifted Wall Street's main indexes to record highs, while strong second-quarter corporate earnings led the S&P 500 to end Friday with its sixth monthly gain in a row.

Signs of a steady economic recovery have also boosted demand for so-called value stocks, including industrials , energy and financials, but the recent spread of the Delta coronavirus variant has raised concerns of another hit to growth.

Dennis Dick, a proprietary trader at Bright Trading LLC, said: "I don't think investors are worried about broader macroeconomic numbers, even if they are showing signs of a slowdown; the concern lies in the risk of reopening being on pause because of the spread of the Delta variant. People know if things do go wrong, the Federal Reserve will add further support."

After the Fed stuck to a dovish policy last week, focus this week will be on business activity data on Monday and Wednesday. On Friday, the Labor Department will issue its monthly employment report.

Economists expect non-farm payrolls to have risen 900,000 last month, compared with 850,000 in June.

In a sign of global mergers and acquisitions (M&A) activity picking up, Square Inc, the payments firm of Twitter Inc co-founder Jack Dorsey, said it would purchase Australian buy now, pay later pioneer Afterpay for US$29 billion.

Afterpay's Australia-listed stock surged 18.8 per cent, while Square's US-listed shares fell 4.4 per cent.

REUTERS