Tuesday May 19th


U.S. stock futures are flat following the Dow’s 900-point surge

U.S. stock index futures were little changed on Tuesday after the market scored its best session in six weeks a day earlier on rising optimism about a coronavirus vaccine. Futures on the Dow Jones Industrial Average were up just 5 points, or less than 0.1%. S&P 500 futures dipped 0.1% while Nasdaq 100 futures rose only 0.1%. Home Depot shares lost about 2% in premarket trading Tuesday after the home improvement retailer said net income last quarter dropped 10.7% due to extra costs related to the pandemic. Although the retailer also said sales increased by 7% for the period. Meanwhile, Walmart shares gained more than 3% in premarket trading after the retailer reported soaring e-commerce sales in the first quarter. Tuesday’s muted action followed a strong rally on Wall Street that saw the Dow and S&P 500 both enjoying their biggest one-day gains since April 6. Investors cheered news that an experimental coronavirus vaccine from Moderna showed promising early signs. The 30-stock Dow jumped more than 900 points, while the S&P 500 closed the day up 3.2%, hitting its highest level since March 6. On Monday, stocks that would benefit from re-opening the economy led the market higher. Cruise operator Carnival gained 15.2%, while Delta and United Airlines both popped more than 13%. “With over 100 treatments and vaccines under development, a medical breakthrough, a more sophisticated test and trace model, and government support could drive more upside,” Mark Haefele, chief investment officer at UBS Global Wealth Management. “But our downside scenario cannot be ruled out. This could be triggered by a significant second wave of virus cases breaking out.” With Monday’s gains, the S&P 500 has rebounded 32% from its March 23 low, now sitting about 13% below its record high in February. On Tuesday, Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will testify virtually before the Senate Committee on Banking, Housing, and Urban Affairs in the first required update to Congress on the economic response to the coronavirus pandemic.  Powell is expected to reiterate the central bank’s commitment to using its “full range of tools” aimed at keeping markets functioning and getting money to those in need. Stocks in Asia jumped on Tuesday as hopes rise on a potential coronavirus vaccine after a promising development from a Moderna trial. South Korea’s Kospi surged 2.25% to close at 1,980.61. In Japan, the Nikkei 225 ended its trading day 1.49% higher at 20,433.45. The Topix index also gained 1.83% to close at 1,486.05. Hong Kong’s Hang Seng index jumped 2.06%. Mainland Chinese stocks edged higher on the day, with the Shanghai composite up 0.81% to about 2,898.58 while the Shenzhen component gained 1.21% to 11,052.85. Oil prices were steady on Tuesday amid signs that producers are cutting output as promised while traders awaited more clarity on the demand picture as some countries ease out of lockdowns. Benchmark Brent crude rose 34 cents, or 0.98%, to trade at $35.15 per barrel. The front-month contract for West Texas Intermediate crude, which is set to expire on Tuesday, was up 91 cents, or 2.9%, at $32.73 per barrel. The July contract, which was trading at vastly higher volumes, was up one cent at $31.75 a barrel. Gold prices rose on Tuesday, supported by fears of a global recession and fallout from central banks’ stimulus measures, while an uptick in risk-appetite after a positive report about a potential COVID-19 vaccine limited bullion’s advance. Spot gold was up 0.2% at $1,734.66 per ounce. U.S. gold futures rose 0.1% to $1,736.60.