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Stock Futures Rise on Stimulus Bets

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U.S. stock futures rose Thursday as investors cheered signs of progress toward a fresh stimulus package that could support the economy through a potential winter slowdown.

Futures tied to the S&P 500 rose 0.5%, suggesting the benchmark stocks gauge may rise for a third-straight day at the opening bell. The S&P 500 closed at its second-highest level ever on Wednesday. Futures tied to the technology-focused Nasdaq-100 also rose 0.5%.

Congressional leaders on Wednesday closed in on a roughly $900 billion coronavirus relief deal that includes another round of direct payments to households. After months of gridlock, the emerging agreement represented a breakthrough at a critical time in the pandemic, with vaccine distribution under way but hospitalizations hitting record highs.

Investors broadly think a new dose of stimulus is necessary to gird the economy until the end of winter and widespread vaccinations have the potential to bring the virus under control in 2021. Rising cases appear to have hit consumer sentiment, weighing on retail sales, and there are new business restrictions in some states.

“The stimulus is key,” said Mary Nicola, a portfolio manager at PineBridge Investments.

“Any stimulus is good stimulus at this point, especially when you’re coming through a rough patch,” Ms. Nicola added. “This will provide a bit more of a boost to the recovery.”

Weekly data on unemployment claims is likely to have remained high last week, economists predicted.

Weekly data on unemployment claims is likely to have remained high last week, economists predicted.

Photo: bryan woolston/Reuters

Weekly data on initial claims for unemployment benefits will shed new light on the state of the economy at 8:30 a.m. ET. Jobless claims spiked early this month in a sign of a fresh downturn in the labor market. They likely fell back slightly in the week ending Dec. 12, while remaining at elevated levels, economists predicted.

International markets also advanced Thursday. The regionwide Stoxx Europe 600 gained 0.5%, led by shares in economically-sensitive commodity producers and retailers. China’s Shanghai Composite Index ended 1.1% higher. Japan’s Nikkei 225 ticked up 0.2%.

Among European stocks, shares in
WPP
rose 3.7% after the advertising giant said sales are recovering faster than expected from the coronavirus shock. London-listed shares of Rio Tinto rose 1.8% after the miner named chief financial officer Jakob Stausholm as its new chief executive.

In bonds, the yield on 10-year Treasury notes edged up to 0.925% from 0.920% Wednesday. The dollar extended its recent slide. The WSJ Dollar Index fell 0.3%, after dropping to its lowest level since April 2018 on Wednesday.

That decline came after the Federal Reserve said $120 billion a month in asset purchases will continue until substantial progress has been made toward its employment and inflation goals. The updated guidance underscores that the central bank will remain supportive of financial markets for some time to come, said Ms. Nicola of PineBridge.

The stimulus package under discussion in Washington was expected to include, along with direct checks, $300 a week in enhanced unemployment insurance and funding for vaccine distribution. Congressional aides noted that the negotiations were continuing and no final agreement had been reached.

Time is tight. Lawmakers expect to attach the aid bill to a full-year spending bill needed to keep the government running after its current funding expires at 12:01 a.m. Saturday.

“We are obviously getting very close to the time period when it gets quite tricky to get a deal over the line,” said Edward Park, chief investment officer at Brooks Macdonald. “Providing some stimulus here is definitely an incremental positive.”

Indications that the U.K. and European Union could strike a trade deal before Britain leaves the bloc at the start of 2021 have also buoyed markets in recent days, Mr. Park said. The last-minute negotiations have sharpened the focus on the Bank of England’s interest-rate decision, due to be published at 7 a.m. ET.

The weakening dollar gave a boost to commodity markets. U.S. crude-oil futures prices rose 1.1% to $48.34 a barrel, extending a run-up driven by expectations of a recovery in energy demand in 2021. Gold futures prices gained 1.4% to $1,885.20 a troy ounce.

Three-month copper forwards advanced 1.2% to $7,906.50 a metric ton on the London Metal Exchange.

Write to Joe Wallace at Joe.Wallace@wsj.com