Stock futures traded sharply higher early Tuesday to begin a holiday-shortened week, as optimism grew about the reopening of the economy and a potential coronavirus vaccine.
Futures on the Dow Jones Industrial Average pointed to an implied opening gain of about 516 points. Dow futures added 513 points or 2.1%. S&P 500 futures gained 1.9%. Nasdaq-100 futures also rose 1.9%. U.S. markets were closed Monday in observance of Memorial Day.
Here’s what the markets were watching:
- American biotech company Novavax said Monday it started the first human study of its experimental coronavirus vaccine. The company said it expects initial results on safety and immune responses in July. Last week, another biotech Moderna reported positive development on its vaccine trial where all 45 participants had developed coronavirus antibodies. There are 10 vaccines in clinical evaluation and 114 in pre-clinical evaluation, according to a running tally by Fundstrat.
- Economic activity continued to pick up as states begin opening up their economies. The biggest gainers in the premarket were directly tied to the reopening. Carnival shares jumped 11%. MGM Resorts climbed 9%. United Airlines and Southwest Airlines rose 7% each.
- The S&P 500 was set to meet or exceed its 200-day moving average after the open Monday. The benchmark needs to gain 1.8% to reach the milestone. Many technical analysts look at that moving average as a sign of the long-term trend. Rising above it could signal a change in long-term trend from bearish to bullish.
“Next month we will know Bank stress test results; whether oil prices are a bounce or something more sustained; and if we have moved out of COVID season or into a second wave,” Christopher Harvey, Wells Fargo’s head of equity strategy, said in a note. “If things break positively, we would expect to see a healthy rotation toward cyclicals, smaller caps, and value stocks.”
The moves in stock futures followed a solid week for Wall Street that saw the 30-stock Dow rise 3.3%, posting its best weekly performance since April. The S&P 500 and Nasdaq also climbed more than 3% last week.
The number of coronavirus cases in the U.S. topped more than 1.6 million as deaths rose to more than 97,000, a tally from Johns Hopkins University showed as of Monday.
Meanwhile, investors kept an eye on the U.S.-China tensions, which showed signs of escalation over the weekend. White House National Security Advisor Robert O’Brien said Sunday the U.S. will likely impose sanctions on China if Beijing implements national security law that would give it greater control over autonomous Hong Kong.
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