U.S. stock futures rose Friday ahead of what’s expected to be the ugliest monthly jobs report ever as investors bet the worst of the coronavirus and its impact on the economy has past.
Dow Jones Industrial Average futures were up by 270 points, or 1.1%, and implied an opening gain of more than 300 points. S&P 500 futures were up 1.2%. Nasdaq-100 futures were 1.1% higher as tech stocks looked to add to their gains after pushing the Nasdaq Composite into positive territory for the year on Thursday.
On Friday, the Labor Department will release its monthly jobs report for April. Economists polled by Dow Jones expect that 21.5 million jobs were lost, which would be a record loss for a single month. They see the unemployment rate jumping to 16% from 4.4%, a post-WWII high. Weekly jobless claims data on Thursday showed more than 33 million Americans have filed for unemployment benefits over the seven-week period ending May 2. But it also showed a slowing pace of job declines.
Stocks have rallied aggressively off their March lows as investors bet on an eventual reopening of the economy and that many tech companies would see solid revenue even through the shutdowns. The S&P 500 has bounced more 30% from its virus low and is just 15% from a record. The Nasdaq Composite is more than 35% off its lows and is now up 0.1% for 2020. Gains from Facebook, Amazon Alphabet and Apple helped lift the index back into positive territory for 2020. At one point, the Nasdaq was down more than 25% year to date.
Most of those tech stocks were higher again in Friday’s premarket trading.
“It’s amazing really given we’re still working from home,” said JJ Kinahan, chief market strategist at TD Ameritrade, about the average clawing back its 2020 losses. “Our reality is we’re working from home and some of the economic demand would seem to be less, yet these stocks continue to fight through.”
Kinahan also noted the market continues to price in a swift reopening of the U.S. economy after the coronavirus forced economic activity to a near screeching halt. “There’s this sense of, ‘OK, we’re going to get back to work and things are going to be better.’ But at what pace are they going to get better, and will that be sustainable?”
It’s helped that oil has rebounded off its lows. Crude is up more than 20% this week.
Stocks that would benefit from reopening the economy rose again Friday morning. Airlines, Disney, MGM Resorts and Hilton Worldwide were all higher in premarket trading Friday.
But Michael Shaoul, chairman and CEO of Marketfield Asset Management, said the market’s recent moves — which have been tame compared to others seen this year — suggest “an understandable fatigue with the constant stream of conflicting information about the progress of the virus and potential for happier and more drastic outcomes in the months ahead.”
“It also suggests that the relief that the worst case medical scenarios are likely to take place is being replaced by an understanding of just how daunting the task of reopening and rebuilding economies will be in the coming months, leaving the SPX unable to move up and challenge key resistance at 3,000,” he said in a note.
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