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(Reuters) – Futures pointed to slim opening gains for Wall Street’s main indexes on Wednesday following results from retailers Target and Lowe’s that trounced estimates, a day after the S&P 500 completed its fastest recovery from a bear market in history.
Big-box chain Target Corp (N:TGT) jumped 8.0% in premarket trade after posting its best quarterly comparable sales growth and online revenues that nearly tripled.
Home improvement chain Lowe’s Companies Inc (N:LOW) rose 2.6% after beating estimates for quarterly same-store sales as it benefited from a surge in demand for its products from consumers stuck indoors.
Its larger rival Home Depot Inc (N:HD) and retail behemoth Walmart Inc (N:WMT) reported similar results on Tuesday.
“These earnings are reflecting the reopening of the economy and the stimulus cheques,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“This quarter might be a different story, unless you get stimulus cheques to come within the next few weeks, but that doesn’t seem feasible at this time.”
Hopes of another round of fiscal coronavirus aid, after enhanced unemployment benefits expired last month, have been driving U.S. stocks higher. But Democrats and Republicans still remain far apart on key issues of the legislature.
Still, the S&P 500 closed at a record high on Tuesday, completing a recovery from a dramatic pandemic-led sell-off. The Nasdaq, the first of the three main indexes to confirm a bull market in June, also closed at an all-time high.
The Dow is still nearly 6% below February’s record closing high.
“Either you read this as a sign that the market could go a lot higher as we enter a cyclical bull market with lots of cash sitting on the sidelines still to pour into value,” said Neil Wilson, chief market analyst at Markets.com in London.
“Or you worry that this is a Fed-fueled tech bubble with forward earnings multiples looking enormously stretched.”
While trillions of dollars in fiscal and monetary support and a rally in tech-related shares have helped the benchmark surge about 55% from its March lows, the country’s battered economy is still far from the pre-pandemic levels.
Minutes from Federal Reserve’s meeting, set for release at 2 p.m. ET (1800 GMT), could offer clues into the policymaker’s view of the economy and its actions in September.
The market’s focus is also expected to shift to U.S. presidential elections, which is about 11 weeks away. Democrats on Tuesday formally nominated Joe Biden for president. The Republican National Convention is slated for next week.
At 8:13 a.m. ET, Dow e-minis <1YMcv1> were up 35 points, or 0.13%, S&P 500 e-minis were up 2.75 points, or 0.08%, while Nasdaq 100 e-minis were down 20.5 points, or 0.18%.
Johnson & Johnson (N:JNJ) said it would buy Momenta Pharmaceuticals Inc (O:MNTA) for about $6.5 billion in cash to bolster its portfolio of treatments for autoimmune diseases. Shares of Momenta soared 69.3%.
Gilead Sciences Inc (O:GILD) fell 4.2% after the U.S. Food and Drug Administration refused to approve its experimental treatment for rheumatoid arthritis in its current form.
Chipmaker Nvidia Corp (O:NVDA) inched up ahead of its quarterly results after the bell.
