Wall St to open flat as stimulus rally cools; Weekly gains on tap

Wall Street indexes were set to take a breather from recent gains on Friday as a coronavirus stimulus package remained in focus ahead of a weekend deadline for a deal, with retail stocks rising on the possibility of strong holiday sales.

Markets are likely to see increased trading volumes in the day due to the expiration of stock index futures, stock index options, stock options and single stock futures at the end of trade – also known as quadruple witching.

Retail stocks including those of Kohl’s Corp (NYSE:KSS), Walmart (NYSE:WMT) Inc and Macy’s Inc (NYSE:M) rose between 0.3% and 2.2% in premarket trading after the National Retail Federation flagged the possibility of high pre-Christmas demand.

“The market is a little bit skeptical because the stopwatch is on and time is running out, people want to see the deal actually inked,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

“The stimulus getting approved would be bullish for the retail sector because the vast majority of that money will go right into holiday shopping on expectation of receiving those stimulus checks even if they come after Christmas.”

U.S. S&P 500 E-minis were up 1 point, or 0.03% at 8:06 a.m. ET, Dow E-minis were up 6 points, or 0.02%, while Nasdaq 100 E-minis were up 2.25 points, or 0.02%.

Wall Street’s three major indexes had ended at record highs on Thursday as the passing of a bill seemed imminent, with bipartisan lawmakers saying the COVID-19 pandemic’s worsening toll meant that failure to agree on new stimulus was no longer an option.

Dismal retail sales data and unemployment claims through the week were also seen as furthering the case for more stimulus.

The prospect of continued monetary and fiscal stimulus has helped stocks look past the economic ructions from the virus, and set them up for strong annual gains, despite a rocky start to the year.

“What we will see is that there will be no grinch this Christmas cause Santa Claus is coming to town and we will get something done,” Hayes added.

Wall Street indexes were set to end the week higher, with the Nasdaq set to outperform its peers with a 3.1% gain on sustained buying into technology stocks.

Microsoft Corp (NASDAQ:MSFT) shed 0.6% after the tech major said it found malicious software in its systems related to a massive hacking campaign disclosed by U.S. officials this week.

FedEx Corp (NYSE:FDX) fell 2.8% after the package delivery company declined to give an earnings forecast for 2021, even as its quarterly profit almost doubled.

Shares of rival United Parcel Service Inc (NYSE:UPS) also declined 1.2%.

Centene (NYSE:CNC) Corp dropped 2.5% after the health insurer forecast 2021 adjusted profit below Wall Street estimates, as it said enrollment in its Obamacare plans was not coming in as expected.

Moderna Inc’s (O:MRNA) shares pared early losses after outgoing President Donald Trump tweeted that the drugmaker’s COVID-19 vaccine had been approved for use, although the U.S. Food and Drug Administration has made no public announcement yet regarding its decision.