Wednesday May 27th


Stocks are set to rally again on optimism about the economy reopening, Dow futures jump 300 points

U.S. stock index futures pointed to more gains at Wednesday’s open on optimism about the reopening of the economy. Shares of airlines and cruise lines led gains in the premarket. Dow Jones Industrial Average futures were up 356 points, or 1.4%. S&P 500 futures gained 1.2% while Nasdaq 100 futures traded higher by 0.6%. Recent hopes for a return to normal consumer habits have pushed the Dow Jones Industrial Average and S&P 500 to the cusp of key market levels for the first time since early March. Stocks started the holiday-shortened week off strong. On Tuesday, the Dow Jones Industrial Average climbed more than 500 points, or 2.2%. The 30-stock average briefly traded above 25,000, a level not seen since early March. The S&P 500 climbed 1.2%, briefly breaching the 3,000 level for the first time since March 5. Many Wall Street analysts believe breaking above this level, also its 200-day moving average, is a signal of a bullish long-term trend. The Nasdaq Composite rose 0.2%. A report from Bloomberg News that said the Trump administration is weighing sanctions on Chinese firms and officials over the situation in Hong Kong pushed stocks off their highs in the final hour of trading. President Donald Trump said Tuesday afternoon he would make an announcement about the administration’s response to China’s actions by the end of this week. But futures signaled investors were ready to look past that concern and instead bet on the reopening. Carnival Corp. shares jumped 14.9% in premarket trading Wednesday. United Airlines added 8%. Nine of eleven S&P 500 sectors were positive in Tuesday’s session, led by banks, which are getting a boost the economy reopening. Citigroup rose more than 9% and JPMorgan gained 7% after CEO Jamie Dimon said the bank is “very valuable” at current prices. JPMorgan was up another 3.3% in premarket trading Wednesday. “For the first time in this crisis, we are being bombarded by good news,” Jim Paulsen, chief investment strategist at the Leuthold Group told CNBC. “The S&P 500 finally breaks above its 200-day moving average (3000)” and “more new vaccine drugs look promising.” Biotech company Novavax said Monday it started the first human study of its experimental coronavirus vaccine. “Certainly the market has been making a V-pattern upward and there’s been a tremendous amount of skepticism around that but we are just starting now to see some evidence in the data turning,” said Michael Darda, MKM Partners chief market strategist and chief economist. “Some better than expected housing numbers. As reopening gets underway, virtually all states now we are starting to see activity bounce off of very low levels.” Data released Tuesday showed new home sales in April topped estimates. Sales of new U.S. single-family homes increased by 623,000 last month, beating estimates of 490,000, according to Dow Jones. A measure of consumer confidence jumped to 86.6 this month from 85.7 in April, according to the Conference Board. Economists polled by Dow Jones expected consumer confidence of 82.3 in May. Stocks’ recent strength — last week the Dow has its best week since early April — still leaves the Dow down more than 12% in 2020. The S&P 500 is off 7.4% for the year and the tech-heavy Nasdaq is up more than 4%. A re-escalation of tensions between the U.S. and China could certainly dent stocks’ recent progress. White House National Security Advisor Robert O’Brien said Sunday the White House will likely impose sanctions on China if Beijing implements national security law that would give it greater control over autonomous Hong Kong. Stocks in Asia Pacific were mixed on Wednesday as investors weighed the potential impact of rising tensions between Washington and Beijing against economies reopening, as coronavirus containment measures are eased. Mainland Chinese stocks were lower on the day, with the Shanghai composite slipping 0.34% to about 2,836.80 while the Shenzhen composite declined 0.855% to around 1,774.22. Hong Kong’s Hang Seng index dipped 0.71%, as of its final hour of trading. Elsewhere, the Nikkei 225 in Japan rose 0.7% to close at 21,419.23, with the Topix index also adding 0.96% to end its trading day at 1,549.47. Over in South Korea, the Kospi closed fractionally higher at 2,031.20. Oil prices fell on Wednesday on revived concerns over how quickly fuel demand will recover even as coronavirus lockdowns begin to ease in many countries, while U.S.-China tensions added to negative sentiment. Brent crude futures fell 52 cents, or 1.4%, to trade at $35.65 per barrel. West Texas Intermediate crude futures were down 39 cents, or 1.14%, to trade at $33.96 per barrel. Gold was trading near a two-week low on Wednesday as optimism around several economies re-opening dulled the metal’s safe-haven appeal, although increasing China-U.S. frictions over Beijing’s proposed security law for Hong Kong tempered losses. Spot gold eased 0.1% to $1,710.01 per ounce by 0301 GMT, trading near last session’s low of $1707.10, when prices dropped as much as 1.3%. U.S. gold futures were also down 0.1% to $1,703.20.