Monday June 6th


Dow futures jump more than 250 points as Wall Street looks to bounce back from losing week

U.S. stock index futures jumped Monday as Wall Street tried to rebound from a losing week. Futures on the Dow Jones Industrial Average gained 261 points, or 0.8%. S&P 500 futures and Nasdaq 100 futures rose 1.1% and 1.4%, respectively. Sentiment got a boost early on after Beijing rolled back some Covid-related restrictions. Meanwhile, The Wall Street Journal reported that Chinese regulators are wrapping up their investigations into ride-hailing giant Didi — potentially signaling that the country’s crackdown on its tech sector may be coming to an end. Overseas, stocks rose more than 1% in China and over 2% in Hong Kong. The early morning action followed another disappointing week for investors as the major averages suffered modest losses. The blue-chip Dow fell 0.9% for its ninth negative week in 10, while the S&P 500 and the Nasdaq Composite lost 1.2% and 1%, respectively, last week for their eighth losing week in nine. Investors have been grappling with fears that the central bank could raise interest rates too fast and too much, causing a recession. Recent statements from the rate-setting Fed members indicate that 50 basis point — or a half-percentage-point — rate increases are likely at the June and July meetings. The U.S. economy added 390,000 jobs in May, which came in better than expected despite fears of an economic slowdown and amid the roaring pace of inflation. “In our view, last week’s economic data showed the US economy remaining resilient,” John Stoltzfus, chief investment strategist at Oppenheimer, said in a note to clients. Some investors believe the strong hiring data could be clearing the way for the Fed to remain aggressive. “For now, the market sees a Federal Reserve trying to navigate a painful and bumpy road, yet trying to find a soft exit,” said Quincy Krosby, chief equity strategist at LPL Financial. “And the market finds itself between wanting to believe in the rallies but not believing that the Fed can negotiate a soft landing.” Shares of Amazon rose 1.5% in premarket trading ahead of the first trading session since a 20-for-1 stock split. Elsewhere, solar stocks moved higher following a report from Reuters that the Biden administration would suspend tariffs on solar panels. Investors will be focused on the consumer price index reading for May, which is slated for Friday morning release. The key inflation gauge is expected to be just slightly cooler than April, which could be interpreted by some as a confirmation that inflation has peaked. The stock market has had a volatile year with the major averages pulling back double digits from their record highs. The S&P 500 is off by 14.7% from its all-time high reached in January. The equity benchmark briefly dipped into bear market territory last month. “The second half of 2022 is going to be a roller coaster ride for investors unless the Fed is able to bring inflation under control without a hard landing,” said Peter Essele, head of portfolio management at Commonwealth Financial Network. “Most investors seem to be wagering on a crash-and-burn scenario at this point as recessionary fears abound, and equity markets fail to develop any sort of positive momentum.” Shares in Asia-Pacific were mixed on Monday, with Chinese stocks leading gains regionally as tech stocks in Hong Kong surged. Hong Kong’s broader Hang Seng index closed 2.71% higher at 21,653.90. The Hang Seng Tech index gained 4.64% to 4,601.95. In mainland China, the Shanghai Composite closed 1.28% higher at 3,236.37 while the Shenzhen Component surged 2.664% to 11,938.12. In Japan, the Nikkei 225 climbed 0.56% on the day to 27,915.89 as shares of Fast Retailing jumped 2.77%. The Topix index advanced 0.31% to 1,939.11. Markets in South Korea were closed on Monday for a holiday. Oil prices hit $120 a barrel on Monday after Saudi Arabia raised crude prices for July and amid doubts that an increased OPEC+ monthly output target will help ease tight supply. Brent crude firmed 56 cents, or 0.5%, to $120.28 a barrel after touching an intraday high of $121.95. U.S. West Texas Intermediate (WTI) crude futures were up 54 cents, or 0.5%, at $119.41 a barrel after hitting a three-month high of $120.99. Gold prices edged higher on Monday, supported by a slight pullback in the U.S. dollar and Treasury yields, although bullion’s outlook remained vulnerable to aggressive interest rate hikes by major central banks. Spot gold was up 0.1% at $1,852.59 per ounce, while U.S. gold futures rose 0.2% to $1,855.40. Gold was still trading below last week’s near one-month highs with prices dropping about 1% on Friday after data showed U.S. employers hired more workers than expected in May.