Monday April 27th


Dow futures rise more than 250 points as NY, other states start to make plans for reopening

U.S. stock index futures were higher in early Monday morning trading as investors mulled the possibility of re-opening the economy after the coronavirus outbreak. Dow Jones Industrial Average futures were up 250 points and implied an opening gain of around 240 points. S&P 500 futures rose about 1% and Nasdaq 100 futures added 1.2%. New York Gov. Andrew Cuomo said Sunday the state plans to re-open its economy in phases. The first phase, Cuomo said, would involve New York’s construction and manufacturing sectors. As part of the second phase, businesses will need to design plans for a re-opening that include social distancing practices and having personal protective equipment available. States including Alaska, Georgia, South Carolina, Tennessee and Texas are beginning to allow restaurants and other establishments to serve customers. Cuomo also noted that coronavirus-related hospitalizations have fallen for 14 days and that virus deaths in New York hit a near one-month low. “As various states begin to reopen their economies and relax social distancing rules, we will get a glimpse of what the new normal looks like,” said Marc Chaikin, CEO of Chaikin Analytics. “The biggest risk to the stock market is a premature reopening of the U.S. economy which results in an increase in COVID-19 cases and requires an abrupt reversal of these efforts to awaken the economy out of its engineered coma.” Stocks that would benefit most from an economic reopening led the way higher on Monday morning. American Airlines, MGM Resorts and Carnival jumped about 3% in premarket trading. Gap and Kohl’s gained more than 2%.  Another drop in oil prices on Monday kept stocks’ gains in check. U.S. West Texas Intermediate futures were down more than 16% at $14.13 per barrel. Wall Street’s coming off its first weekly decline in three as a record plunge in crude prices last Monday and Tuesday sent investors on a wild ride. Both the Dow and S&P 500 fell over 1% last week while the Nasdaq Composite dipped 0.2%. Energy stocks were among the biggest losers in premarket trading on Monday. Still, coronavirus shelter-in-place orders and social distancing guidelines remain Wall Street’s No. 1 concern as the rules keep thousands of businesses closed. Officials have confirmed nearly 3 million Covid-19 cases worldwide with over 900,000 in the U.S., according to data from Johns Hopkins. The outbreak, and subsequent business closures, sparked a wave of job losses. Data from the Labor Department show that more than 26 million people have filed for unemployment benefits over the past five weeks. To be sure, a decline in new virus infections and unprecedented monetary and fiscal stimulus have sparked a massive stock-market rally from the lows reached on March 23. Since then, the major averages are all up more than 20%, with the S&P 500 retracing about half of its decline from a record set Feb. 19. Investors have also cheered the prospects of Gilead Sciences’ remdesivir as a potential treatment for the coronavirus. On April 16, STAT News reported patients at a Chicago hospital with severe coronavirus symptoms were quickly recovering after being treated with the drug in a trial. A Financial Times report on Wednesday quelled some of that excitement, however, as it stated remdesivir did not improve patients’ conditions during a trial in China. Gilead pushed back on the report and the study it cited, noting the trial was “was terminated early due to low enrollment,” making it “underpowered to enable statistically meaningful conclusions.” “This drug has become the single most important macro topic/theme/trend in the entire market,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “Investors are dismissing the ‘flop’ headline from the FT and continue to anticipate positive results of some kind out of (at least) one of the many Remdesivir trials now underway (while FDA approval is widely assumed).” “The present setup is such that Remdesivir anticipation will very likely be more beneficial/powerful than the actual results themselves (the data most likely will show efficacy to some extent in certain instances, but a medical “silver bullet” isn’t about to emerge),” Crisafulli added. Stocks in Asia Pacific rose on Monday, as the Bank of Japan announced its decision to enhance monetary policy easing. Japanese stocks led gains among the region’s major markets,  the Nikkei 225 rose 2.71% to close at 19,783.22. The Topix index also advanced 1.83% to finish its trading day at 1,447.25. Mainland Chinese stocks were up on the day, with the Shanghai composite rising 0.25% to about 2,815.49 while the Shenzhen composite fractionally higher at approximately 1,738.05. Hong Kong’s Hang Seng index also jumped about 1.9%, as of its final hour of trading. Over in South Korea, the Kospi added 1.79% to close at 1,922.77. Gold slipped on Monday as signs that countries may soon ease coronavirus-driven lockdowns lifted risk sentiment, although its losses were limited by hopes of more stimulus measures from major central banks. Spot gold was down 0.6% at $1,716.33 per ounce. U.S. gold futures were little changed at $1,735.90.