Monday August 31st

31-08-2020

Stock futures rise slightly as Wall Street wraps up its best August in more than 30 years

U.S. stock index futures rose Monday morning as the S&P 500 wraps up its best August performance since the 1980s. Dow Jones Industrial Average futures were up 41 points, or 0.1%. S&P 500 futures added 0.2%. Nasdaq 100 futures gained 0.3%. The S&P 500 is up 7.2% month to date, putting the broader-market index on track for its biggest August gain since 1984. The Dow has rallied more than 8% this month and is also headed for its best August in 36 years. This month’s gains have pushed the S&P 500 to record levels, officially confirming a new bull market has started. The Dow, meanwhile, erased its 2020 losses on Friday, closing the session with a year-to-date gain 0.4%. Two big stock splits take effect Monday. Apple shares gained 1% in premarket trading as a 4-for-1 split took effect. Tesla shares added nearly 3% following its 5-for-1 split. The August rally built on the market’s sharp rebound off the March 23 intraday lows. Since then, the Dow and S&P 500 are up 57% and 60.1%, respectively. We “had hoped that the market would consolidate its gains since March 23, giving earnings a chance to rebound,” said Ed Yardeni, president and chief investment strategist at Yardeni Research, in a note. “However, Fed officials continue to drive up stock prices by committing to keeping interest rates close to zero for a very long time … Consequently, they are fueling the meltup in stock prices.” Earlier this year, the Federal Reserve cut rates to zero and launched an open-ended asset-purchasing program to support the economy through the coronavirus pandemic. Last week, the central bank laid out an inflation policy framework that would keep rates lower for longer. In an apparent long-term bet on the global economy, Warren Buffett announced Sunday that his Berkshire Hathaway conglomerate had acquired stakes of more than 5% in Japan’s five-leading trading companies. Those companies are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. The five businesses import everything from metals to food into Japan and provide services to manufacturers. The Dow will kick off the week with three new constituents and with Apple having a much smaller influence on the 30-stock average. Come Monday’s open, Salesforce, Amgen and Honeywell will be included in the Dow, replacing longtime component Exxon Mobil, Pfizer and Raytheon Technologies. Traders will also look ahead to Friday, when the latest U.S. jobs report is set for release. Economists polled by Dow Jones forecast that 1.255 million jobs were created in August. Shares in Asia Pacific were mixed on Monday, with Japan stocks leading gains among the region’s major markets as investors monitored political developments in the country. Mainland Chinese stocks shed earlier gains to slip on the day, with the Shanghai composite down 0.24% to about 3,395.68 while the Shenzhen component shed 0.672% to around 13,758.23. Hong Kong’s Hang Seng index was 0.13% lower, as of its final hour of trading. In Japan, the Nikkei 225 gained 1.12% to close at 23,139.76 while the Topix index advanced 0.83% to end its trading day at 1,618.18. Meanwhile, South Korea’s Kospi fell 1.17% to close at 2,326.17. Oil prices nudged up on Monday, with Brent futures set to post a fifth straight monthly gain, as global stimulus measures underpin prices even as demand struggles to return to pre-COVID levels in a well supplied market. Brent crude futures for November climbed 49 cents, or 1%, to $46.30 a barrel, while U.S. West Texas Intermediate crude was at $43.39 a barrel, up 41 cents, or 0.95%. WTI is on track for a fourth monthly rise, reaching $43.78 a barrel on Aug. 26 when Hurricane Laura struck. Gold jumped on Friday, a day after a steep sell-off, as the U.S. dollar weakened and the U.S. Federal Reserve signaled a prolonged low interest rate strategy. Spot gold rose 1.9% to $1,964.62 per ounce, taking gains this week to more than 1%. Prices fell as much as 2.2% on Thursday after U.S. Treasury yields gained following Fed Chair Jerome Powell’s speech.