US open: Stocks bounce back after Yellen backs $1.9trn stimulus package

Wall Street futures were in the green early on Friday after Treasury Secretary Janet Yellen stated a large Covid-19 relief package would be needed for the US was to stage a full economic recovery.

As of 1540 GMT, the Dow Jones Industrial Average was up 0.32% at 31,595.09, while the S&P 500 was 0.32% firmer at 3,926.60 and the Nasdaq Composite started out the session 0.61% stronger at 13,949.95.

The Dow opened 101.75 points higher on Friday, cutting into losses recorded in the previous session after this week's initial jobless claims fell well and truly short of expectations.

However, stocks made an about-face turn on Friday after Yellen stated a $1.9trn stimulus deal would likely assist the US in getting back to full employment in twelve months time.

"We think it's very important to have a big package [that] addresses the pain this has caused – 15.0m Americans behind on their rent, 24.0m adults and 12.0m children who don't have enough to eat, small businesses failing," Yellen said.

"I think the price of doing too little is much higher than the price of doing something big. We think that the benefits will far outweigh the costs in the longer run."

She also stated that inflation should not be the country's biggest concern at the moment, noting that it has been "very low for over a decade" and that the Federal Reserve and others had tools to address it.

Speaker Nancy Pelosi said on Thursday that the US House of Representatives will look to push through Joe Biden's $1.9trn Covid-19 relief plan before the end of the month, with Democratic congressional leaders likely to attempt to pass a package without votes from the Republican Party.

In the corporate space, Deere & Co smashed first-quarter earnings forecasts and boosted its full-year profit outlook, while Applied Materials posted better-than-expected second-quarter earnings overnight.

On the macro front, a flash reading of IHS Markit's February composite PMI came in at 58.8, up from 58.7 in January to a 71-month high as coronavirus-related restrictions were eased, offsetting a moderation in manufacturing output so far in the month.

Elsewhere, existing home sales unexpectedly rose last month despite tight inventories leading to a hike in house prices, according to the National Association of Realtors, which said existing home sales increased 0.6% to a seasonally adjusted annual rate of 6.69m units in January.