Tuesday February 16th


Dow futures rise 200 points as stocks look to add to record levels

U.S. stock index futures rose early Tuesday after a key volatility gauge Wall Street watches declined, which could unleash more buying from quant funds. Dow Jones Industrial Average futures climbed 200 points, while S&P 500 futures rose 0.6% and Nasdaq 100 futures gained 0.5%. The U.S. stock market was closed on Monday for President’s Day. The Cboe Volatility Index, widely viewed as Wall Street’s best fear gauge, broke below 20 to settle at 19.97 on Friday, marking the first significant breach of the threshold since the pandemic-induced sell-off began in February 2020. The crack of the 20 level is viewed by some on Wall Street as a big “risk on” signal, which could trigger buying from algorithmic traders and other big players. The gauge last traded up about one point to 21 on Tuesday morning. “Fear is receding from the market,” Tom Lee, FundStrat’s co-founder and head of research, said in a note on Friday. “And receding fear is followed by systematic and quant funds adding ‘leverage’ — in other words, this is a set-up to see a rally.” CVS Health jumped more than 2% after the drugstore chain’s fourth-quarter earnings beat Wall Street’s expectations with its pharmacy sales getting a lift from providing Covid-19 testing and vaccines. On Tuesday, the 10-year Treasury yield topped 1.25% for the first time since March. The major averages finished last week at record levels even as February’s rally appeared to cool off somewhat. The Dow has gained 4.9% in February, while the S&P 500 and the Nasdaq have rallied 5.9% and 7.8%, respectively. The S&P 500 has raked in ten record closes in 2021. Easing fears across Wall Street are likely in large part thanks to the rollout of the Covid-19 vaccine, economic reopening and expectations for more fiscal stimulus. “Covid is far from defeated, but the path toward economic normalization is clearer as more vaccines that reduce hospitalizations and eliminate fatalities are approved,” Dennis DeBusschere, strategist at Evercore ISI, said in an email. Freezing weather in regions across the U.S. sparked another rally in energy futures on Monday and put West Texas Intermediate crude contracts above $60 a barrel for the first time since the early days of the coronavirus pandemic. Bitcoin crossed $50,000 for the first time ever Tuesday, continuing its dizzying rally as more companies warmed to the crypto space. Stocks in Asia-Pacific rose on Tuesday as markets in mainland China remain closed for the Lunar New Year holiday. Hong Kong’s Hang Seng index, which returned to trade following holidays in the last few days, jumped 1.9% to close at 30,746.66. In Japan, the Nikkei 225 advanced 1.28% to close at 30,467.75 while the Topix index gained 0.57% on the day to 1,965.08. South Korea’s Kospi edged 0.52% higher to close at 3,163.25. Oil prices rose on Tuesday as a cold front shut wells and refineries in Texas, the biggest crude producing state in the United States, the world’s biggest oil producer. Prices also gained as Yemen’s Iran-aligned Houthi group said it struck airports in Saudi Arabia with drones, raising supply concerns in the world’s biggest oil exporter, and on optimism for a global economic recovery amid accelerated COVID-19 vaccine rollouts. Brent crude was up 11 cents, or 0.2%, at $63.41 a barrel at 0144 GMT, after rising to its highest since January 2020 in the previous session. U.S. West Texas Intermediate (WTI) crude futures gained 62 cents, or about 1%, to $60.09 a barrel. WTI did not settle on Monday because of a U.S. federal holiday. Prices will settle at the close of trading on Tuesday. U.S. gold futures were steady at $1,824.00 per ounce, while silver gained 0.5% to $27.73.