Monday May 10th

10-05-2021

Dow and S&P 500 futures rise to start the week, energy stocks gain

U.S. stock index futures were mostly higher on Monday, as major U.S. equity indexes hover near records. Dow futures gained 109 points, while those linked to the S&P 500 were higher by 0.1%. Nasdaq 100 futures were 0.3% lower. The moves came after last week’s trading ended on an upbeat note with both the Dow Jones Industrial Average and the S&P 500 hitting fresh all-time highs on Friday. Gasoline futures rose after a ransomware attack forced the closure of the largest U.S. fuel pipeline over the weekend. Colonial Pipeline, which operates a 5,500-mile system, said it was forced to halt the transport of fuel from the Gulf Coast to the New York metro area on Friday as it “took certain systems offline to contain the threat.” Colonial said Sunday evening that some of its smaller lateral lines once again online, but that its main lines are still shut down. Shares of energy stocks gained in the premarket including Marathon Oil, Occidental Petroleum and Devon Energy. Chevron was up 1% in early trading and set to give a boost to the Dow. Exxon was also higher in early trading. Cybersecurity shares also gained in early trading. Shares of FireEye jumped 6% in premarket trading. Fortinet and CrowdStrike were also higher. Bigger tech stocks declined in early trading, however, weighing on sentiment. Tesla was down 1%. Oracle lost nearly 1% after a downgrade from Barclays. Facebook and Alphabet were also lower after a downgrade by Citigroup. Last week, the Dow rallied 2.7% and the S&P 500 gained 1.2%. Despite a 0.9% rally on the week’s final session, the Nasdaq Composite shed 1.5% over the same period. The late-week optimism came despite a far-weaker-than-expected April jobs report, which showed that U.S. employers added 266,000 net payrolls last month. Economists polled by Dow Jones had expected 1 million additions. Mike Wilson, chief U.S. equity strategist at Morgan Stanley, noted that traders appear to have already priced a robust economic reopening thanks to declining Covid-19 cases. Any news that could threaten that narrative could quickly impact where portfolio managers allocate cash. “We’re watching expectations vs reality with the market now well priced for reopening. On a cumulative basis, retail sales are above where they would have been on pre-COVID trends – suggesting some expectations risk around the pent up demand narrative,” Wilson wrote over the weekend. “The labor market has less slack than is typical at this point in the cycle,” he added. “We recommend moving up the quality curve and adding more defensive balance as the market shifts toward mid-cycle leadership.” The market will face a key test on Wednesday with the release of CPI inflation data. Investors fear a scenario where the Federal Reserve is forced to cut back its easy money policies to curb inflation, before the economy has fully recovered from the pandemic. Stock markets in Asia-Pacific were broadly higher on Monday, shrugging off the weaker-than-expected April U.S. jobs reports; while oil futures advanced. South Korea’s Kospi was one of the largest gainers, rising 1.63% to close at 3,249.30 in the first session of the week. In Japan, the Nikkei 225 rose 0.55% to end the session at 29,518.34 and the Topix jumped 0.99% to 1,952.27. Greater China markets were mixed. The Shanghai composite inched up 0.27% to 3,427.99, while stocks in Shenzhen jumped 0.19% to 2,243.91 at the close. Hong Kong’s Hang Seng Index fell 0.3% in late Monday trade. Futures for fuel prices rose Monday, as much of one of the largest pipelines in the U.S. remains closed following a cybersecurity attack. Gasoline futures rose 1.4% to $2.156 per gallon, pulling back slightly from their highest levels of the overnight session. Heating oil futures rose 0.9% to $2.03, also off the highest levels of the session. West Texas Intermediate crude futures, the U.S. oil benchmark, advanced 0.5% to $65.24 per barrel. International benchmark Brent crude traded at $68.68 per barrel, for a gain of 40 cents. Natural gas futures declined 0.9% to $2.93 per million British thermal units. Gold prices rose on Monday, hovering near a three-month peak, as a miss in the U.S. jobs numbers last week cemented expectations that interest rates will remain low for some time, denting the dollar and boosting non-yielding metal’s appeal. Spot gold was up 0.4% to $1,836.80 per ounce, after hitting its highest since Feb. 11 at $1,842.91 on Friday. U.S. gold futures gained 0.4% to $1,838.10.