Wednesday June 3rd

3-06-2020

Dow futures rise more than 200 points as optimism grows over the reopening of the economy

U.S. stock index futures rose in early trading on Wednesday as markets continued to rally on optimism over economies emerging from coronavirus-led shutdowns. Dow futures gained 218 points, or 0.9%. Futures for the S&P 500 added 0.6%. Nasdaq 100 futures were higher by 0.4%. Futures extended their gains slightly after ADP and Moody’s Analytics reported private payrolls fell by another 2.76 million in May. The ADP number was far less than the 8.75M estimate. The reason for the wide disparity was not immediately clear. The Nasdaq 100 index, which tracks the 100-largest nonfinancial companies in the Nasdaq Composite, entered Wednesday less than 1% from its record high set Feb. 19. The index has rallied 42.6% from an intraday low set on March 23. Those gains have been provided in large part by stocks that benefited from people staying at home due to the coronavirus. During premarket trading, the Invesco QQQ Trust — which tracks the Nasdaq 100 — traded 0.3% higher. The S&P 500 is up 1% so far in June, bringing its gain from its pandemic low in March to more than 40%. On Tuesday, stocks rose as optimism around reopening businesses overshadowed concerns about the global pandemic, U.S.-China trade tensions and nationwide protests. Equities got an extra boost in the final hour of trading and closed around their session highs. Nationwide protests were largely calm on Monday evening. “Despite several issues of importance — national riots, Chinese relations, an ongoing pandemic — the stock market is primarily focused on a single thing:  the restart of U.S. and global economic activities,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. Stocks tied to the reopening of states outperformed. Citigroup, Wells Fargo and Bank of America all rose at least 0.9%. Gap climbed 7.7%. Southwest gained 2.6%. Mall and shopping center operators saw robust gains on Tuesday. The Nasdaq Composite was the relative underperformer, gaining 0.6% as investors focused on the economic reopening and rotated out of the stay-at-home plays. “The broader stock market (i.e., small cap stocks, cyclical sectors, international stock markets and emerging stock markets) is increasingly participating more pronouncedly in this rally suggesting the recession is ending,” Paulsen added. Stocks have continued their trek upward as risk appetite grows on optimism that the worst of the economic downturn from the spread of the coronavirus is in the past. Gains in June follow back-to-back monthly increases in April and May for U.S. equities. Wharton professor Jeremy Siegel said the stock market rally still has further to go thanks to the massive support from the Federal Reserve. “I think this rally has further to go. It has all those doubters there but it’s the liquidity that the Fed provided that I think is the prime determinant,” Siegel said on CNBC’s “Closing Bell.” Stocks in Asia largely rose on Wednesday, with optimism over the reopening of economies as authorities ease coronavirus-induced lockdown measures. Over in South Korea, the Kospi led gains among the region’s major markets as it rose 2.87% to close at 2,147. The moves came after South Korea on Wednesday unveiled a 35.3 trillion won ($29 billion) supplementary budget, raising the total stimulus to 270 trillion won as it battles the economic hit from the coronavirus pandemic, according to Reuters. Japan’s Nikkei 225 also saw decent gains as it advanced 1.29% to finish its trading day at 22,613.76. The Topix index closed 0.72% higher at 1,599.08. In Hong Kong, the Hang Seng index rose 1.22%, as of its final hour of trading. Stocks in mainland China closed little changed, with the Shanghai composite fractionally higher at about 2,923.37 while the Shenzhen component dipped slightly to around 11,108.36. Oil fell after touching its highest since March at more than $40 a barrel on Wednesday, pressured by doubts that an early meeting of OPEC and its allies to extend existing output cuts will take place. Brent crude dropped after Bloomberg reported that the meeting suggested for Thursday was unlikely unless problems around compliance were resolved. Reuters sources said that Saudi Arabia and Russia had a preliminary agreement to extend the cuts, but a meeting on Thursday rather than later in June might not happen. Brent crude futures for August were down 54 cents, or 1.3%, at $39.03, having earlier touched their highest since March 6 at $40.53. West Texas Intermediate crude for July fell 59 cents, or 1.6%, to $36.23. Gold prices extended losses on Wednesday as equities jumped to three-month highs on optimism over global economic recovery, though losses were limited by a weaker U.S. dollar and civil unrest in the United States. Spot gold fell 0.5% to $1,718.26 an ounce after dropping about 0.7% on Tuesday. U.S. gold futures fell 0.7% to $1,722.70.