Futures tied to major U.S. equity averages advanced in early morning trading Tuesday, with markets likely to push the S&P 500 to the cusp of a new all-time high.
The gains were driven by a rotation out of technology shares and into stocks that would benefit from a reopening of the economy and a vaccine, such as cruise lines and airlines.
Dow Jones Industrial Average futures rose 350 points, or 1.3%. S&P 500 futures added 0.5%. Nasdaq 100 futures were down 0.7%, however. The S&P 500 closed Monday just 0.97% from its record set in February.
Futures overnight added to their gains after local news agencies reported Russian President Vladimir Putin claimed the country had given regulatory approval for the world’s first Covid-19 vaccine.
While there was skepticism about whether Russia had developed a safe vaccine so quickly, the news triggered optimism from investors about the race for an inoculation and perhaps that the market isn’t pricing in how quickly a valid one could be ready.
Shares of stocks that would benefit most from a vaccine jumped in premarket trading. American Airlines gained 6%. Norwegian Cruise Lines climbed 6% as well. Casino shares rose. Mall-owner Simon Property Group was higher. Goldman Sachs over the weekend raised its economic growth outlook, predicting at least one vaccine approved by the end of this year and widespread distribution of the drug by the second quarter of next year.
The 30-stock Dow gained about 350 points in regular trading on Monday, posting its seventh positive session in a row — its longest winning streak since September 2019. The S&P 500 gained 0.2%, sitting just below its record high set in February. Meanwhile, the Nasdaq underperformed with a 0.4% loss as investors rotated out of some of the high-fliers.
“Markets are looking forward to better days ahead,” Jeff Buchbinder, equity strategist at LPL Financial, said in a note. “Although the timing is uncertain, the stock market is expressing confidence that the pandemic will end eventually with a vaccine—or multiple vaccines—and with help from better treatments in the interim.”
Investors still grappled with the uncertain fate of further coronavirus stimulus aimed at supporting Americans struggling during the pandemic.
Treasury Secretary Steven Mnuchin said Monday the White House is open to resuming coronavirus aid talks with Democrats and putting more relief money on the table to reach a compromise.
Senate Majority Leader Mitch McConnell said Monday in a tweet that he hoped lawmakers will be finalizing the bill this week and that he’s glad President Donald Trump “stepped in to soften the blow of their hostage tactics.”
Over the weekend, Trump signed four executive orders to extend some coronavirus aid, including unemployment benefits, a payroll tax holiday, defer student loan payments through 2020 and extend the federal protections from evictions.
“Given the limited scope of the deal and the positive market reaction, equity investors continue to embed a likelihood that a larger agreement is reached,” Mark Hackett Nationwide’s chief of investment research, said in a note on Monday.
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