Monday May 18th

18-05-2020

Stock futures add to gains on vaccine hope as open nears, Dow futures now up 700 points

U.S. stock index futures rose sharply Monday, rebounding from losses last week, as news from a Moderna trial stoked optimism about a potential coronavirus vaccine. Dow Jones Industrial Average futures jumped 717 points, or 3.1%. S&P 500 futures added 2.8%. Nasdaq-100 futures were up 1.9%. Moderna shares rallied more than 26% after the company reported “positive” phase one results for a potential coronavirus vaccine. The company said that after two doses all 45 trial participants had developed coronavirus antibodies. Shares of companies that would benefit from the economy reopening also rose in the premarket. Disney traded nearly 3% higher while MGM Resorts traded 6% higher. Cruise operator Carnival gained 7.8%. Deltas and United Airlines both rose more than 7% along with American. Comments from the Federal Reserve chief also added to the bullish sentiment. Federal Reserve Chairman Jerome Powell said to CBS’ “60 Minutes” that “there’s a lot more we can do” to help the economy. “We’ve done what we can as we go. But I will say that we’re not out of ammunition by a long shot. No, there’s really no limit to what we can do with these lending programs that we have.” The central bank leader also said he’s “highly confident” the U.S. economy will claw its way back from the current pullback, but warned that it may not fully recover until a Covid-19 vaccine is complete. “Don’t fight the Fed,” wrote FundStrat’s Tom Lee  to clients after the interview. The Nasdaq Composite and S&P 500 fell 1.1% and 2.2%, respectively, last week with the latter notching its worst week since March. The Dow industrials finished the week down 2.65% for its third negative week in four and its worst week since April 3. Wall Street’s veteran investors say stocks could be in for choppy trading until it’s clear that state efforts to reopen their economies aren’t met with significant spikes in new cases of Covid-19. This weekend most states either partially or completely ended lockdowns. A flurry of recent economic data, including record-setting unemployment figures and a 16.4% plunge in April retail sales, show just how abruptly state-imposed business closures impacted the broader U.S. economy. Major markets in Asia were little changed on Monday as U.S. Federal Reserve Chairman Jerome Powell said the economy stateside may need a coronavirus vaccine to fully recover. Mainland Chinese stocks were mixed on the day, with the Shanghai composite up 0.24% to about 2,875.42 while the Shenzhen composite shed 0.427% to approximately 1,800.84. The Hang Seng index in Hong Kong was 0.5%, as of its final hour of trading. Elsewhere, Japan’s Nikkei 225 closed 0.48% higher at 20,133.73 while the Topix index rose 0.38% to end its trading day at 1,459.29. South Korea’s Kospi also advanced 0.51% to close at 1,937.11. West Texas Intermediate for June delivery jumped more than 9% on Monday to a two-month high, one day ahead of the contract’s expiration, as production cuts and the easing of stay-at-home restrictions supported prices. “Producers are significantly throttling back output and, with demand increasing, the market is on a slow path towards recovery,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez Masiu. “Faced with meager demand and unattractive low prices, production curtailments came faster and deeper than initially anticipated.” WTI, the U.S. benchmark, jumped 9.24%, or $2.72, to trade at $32.15 per barrel. International benchmark Brent crude traded 6% higher at $34.47 per barrel. Gold jumped more than 1% on Monday to its highest since October 2012 after a batch of weak data knocked hopes for a speedy global economic recovery while auto-catalyst palladium surged to a three-week high. Spot gold was up 1% at $1,758.55 an ounce by 0931 GMT and U.S. gold futures rose 0.8% to $1,770.70.