Dow futures rise, Trump eyes $1 trillion infrastructure proposal

The US Fed intervenes, Dow, Nasdaq and S&P 500 futures rise, and reports of a US$1 trillion infrastructure proposal emerge.

Dow futures up following weak Monday open

US Markets were on shaky ground heading into Monday’s session; as we wrote yesterday before the open:

‘Dow Jones Industrial Average (DJIA) futures were trading down 935 points or 3.66%, suggesting the market would open significantly lower on Monday, 15 June.’

That did indeed come to pass, with the DJIA dropping sharply in the opening hours of trade, before snapping back to finish the session up 0.62% or 157 points, at the 25,763 point level.

On a more granular level, financial stocks saw strong traction on Monday, with Goldman Sachs rising 2.25%, American Express up 2.23% and JPMorgan Chase & Co up 1.38%. By comparison, the worst performing Dow constituents during the day were Merck, Chevron, and Pfizer.

Elsewhere, the S&P 500 and the Nasdaq composite rose 0.83% and 1.43%, respectively.

US Fed intervenes, infrastructure proposal reports emerge

Looking at the catalysts behind the above market moves, on Monday, the US Federal Reserve announced that it would commence buying a basket of individual US corporate bonds, under the Secondary Market Corporate Credit Facility (SMCCF) program.

According to the Fed, the aim of these purchases is to 'support market liquidity and the availability of credit for large employers.'

If that wasn’t enough to drive bullish sentiment amongst investors, reports have begun to surface that US President Donald Trump is in the process of preparing a US$1 trillion infrastructure proposal.

According to individuals familiar with the stimulus proposal and as reported by Bloomberg:

‘A preliminary version of the proposal being prepared by the Department of Transportation would reserve most of the money for traditional infrastructure work, like roads and bridges, but would also set aside funds for 5G wireless infrastructure and rural broadband.’

In response to all this, as of 12:51am (EDT), Dow Jones Industrial Average futures traded some 464.5 points to 1.8% higher, suggesting the key US benchmark would open higher on Tuesday, 16 June.

S&P 500 and Nasdaq Composite futures were also up at the time of writing.

Finally, it’s set to be a jam-packed day in terms of economic data releases on Tuesday, with retail sales data (May), industrial production data (May), capacity utilization data (May), Home builders' index data (June), and business inventories data (April), all set to be released.

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