US pre-open: Stocks set for more gains after dovish Yellen

US futures pointed to a positive open on Wall Street, with investor sentiment still underpinned by Federal Reserve Chair Janet Yellen’s dovish tone the previous day.

At 1100 BST, Dow Jones Industrial Average and S&P 500 futures were up 0.5% while Nasdaq futures were 0.6% firmer.

“US markets look set for a stronger open with risk-on sentiment returning to markets after Ms Yellen signalled a slower pace of rate hikes this year,” said CMC Markets analyst Jasper Lawler.

Meanwhile, oil prices gained after a report by the American Petroleum Institute late on Tuesday showed US crude stocks likely rose by 2.6m barrels last week to 534.4m, which was less than the 3.3m analysts had expected.

West Texas Intermediate was up 1.6% to $38.90 a barrel and Brent crude was 1.3% firmer at $39.64.

In a speech at the Economic Club of New York, Yellen said the central bank would move cautiously when it came to further interest rate hikes, striking a dovish tone that contrasted greatly with the hawkish comments last week from San Francisco Fed President John Williams, Atlanta Fed President Dennis Lockhart and St Louis Fed President James Bullard.

Yellen highlighted global economic uncertainty, including the slowdown in China and sliding oil prices as reasons behind the Fed’s decision not to hike in January or March and said there would be “only gradual increases” going forward.

“Considering the risk to the outlook, I consider it appropriate for the committee to proceed cautiously in adjusting policy,” Yellen said, noting that growth this year was expected to be weaker than previously thought.

“Yellen has just killed April and probably June as “live” meetings. The resulting drop in the dollar since Ms Yellen’s speech has erased all of its gains last week and has given oil and stock markets a firm footing with which to continue the rebound that began in February,” Lawler said.

On the corporate front, Boeing was likely to be in focus after saying it will cut more than 4,500 jobs by June to accelerate cost cuts.

Technology giant Apple Inc was higher in pre-market trade after the Wall Street Journal reported that it will supply every Major League Baseball team with iPad Pro tablets to help teams and coaches use performance stats.

Sonic Corp rallied after the fast food chain’s second quarter earnings beat expectations.

On the downside, Wells Fargo was weaker after a regulatory filing revealed that Berkshire Hathaway upped its stake in the company.

Still to come on the macroeconomic calendar, investors will eye the release of the ADP employment report at 1315 BST, which is widely seen as a pre-cursor to Friday’s nonfarm payrolls. Societe Generale expects the report the show a solid increase of 217,000 in March, up from 214,000 in February.

“This comes ahead of Friday’s employment report which we expect to show 249,000 net jobs created in March, the unemployment rate ticking down to 4.8%, and average hourly earnings growth remaining at 2.2% year-on-year.”