U.S. Stocks Set To Open Higher As Retail Sales Report Is Much Better Than Expected

The Fed Starts Buying Corporate Bonds

S&P 500 futures are up about 1% in the premarket trading session as the market continues to enjoy the upside momentum caused by Fed’s decision to start buying corporate bonds.

Yesterday, the Fed announced that it would purchase up to $250 billion of individual corporate bonds and helped the market finish the day on a positive note after it spent most of the day in the red zone.

Fed’s decision highlights its ambition to provide as much support as necessary to keep asset prices high while maintaining low borrowing costs. While the Fed’s own economic outlook looks grim, it will continue to push asset prices higher in order to maintain stability in the financial markets despite the disruption from the coronavirus pandemic.

The Trump Administration Is Rumored To Prepare A Major Infrastructure Plan

According to Bloomberg News, the current U.S. administration wants to provide an additional boost to the economy as it starts to recover from the hit dealt by virus containment measures.

The infrastructure plan was part of Trump’s original plan to boost the U.S. economy back at the time when he entered his previous election race, so the rumor looks very plausible.

The size of the infrastructure plan may be close to $1 trillion. This  plan may boost employment and provide support to infrastructure-related companies. The steel sector looks like a major beneficiary under the infrastructure plan, so companies like U.S. Steel,  Nucor, Cleveland-Cliffs may see increased interest today.

Retail Sales

The U.S. has just reported Retail Sales for May, and the numbers look good. On a month-over-month basis, Retail Sales were up 17.7% compared to analyst consensus which called for an increase of 8%.

Retail Sales excluding Autos were up 12.4% compared to analyst expectations of a 5.5% growth. On a year-over-year basis, Retail Sales were down 6.1%. This is a material improvement compared to the previous Retail Sales report which showed that Retail Sales were down as much as 21.6% on a year-over-year basis.

The Retail Sales report will likely provide additional support to the market as it shows that the measures to support economy are working.

For a look at all of today’s economic events, check out our economic calendar.