U.S. stock futures indicated a powerful open for Wall Street on Tuesday after a long holiday weekend, as investors seized on fresh coronavirus vaccine news and signs that global economies are slowly starting to crawl back from the pandemic shutdown.
How are benchmarks trading?
Dow Jones Industrial Average futures YMM20, +2.24% climbed 614 points, or 2.5%, to 25,035, while S&P 500 futures ESM20, +1.95% rose 64.6 points, or 2.2%, to 3,017, while Nasdaq-100 futures NQM20, +1.38% gained 152 points, or 1.6%, to 9,559.50.
On Friday, the Dow DJIA, +2.45% fell 8.96 points, or less than 0.1%, to end at 24,465.16, the S&P 500 index SPX, +2.03% closed 6.94 points higher, or 0.2%, at 2,955.45, while the Nasdaq Composite COMP, +1.66% traded 0.4% higher to 9,324.59, a gain of 39.71 points.
For the week, the Dow climbed 3.3%, the S&P 500 advanced 3.2% and the Nasdaq Composite rose 3.4%. The Russell 2000 notched a 7.8% weekly rise.
What’s driving the market?
Investors were focusing on signs of life in the global economy as well as news of the gradual removal of economic restrictions related to COVID-19 and signs that Americans are beginning to feel safe enough to travel and congregate in larger groups.
Travel related stocks were surging in the U.S. and Europe after news that a German airline will resume flights in July as travel restrictions are lifted in Spain and on data showing an increase in U.S. air travel. The U.S. Global ETF Jets JETS, +8.54%, which tracks the airline industry, was up nearly 8% before the start of trade.
Data from OpenTable shows Americans are returning slowly to restaurants in some parts of the country, the Wall Street Journal reported, along with numbers showing freight trucking activity picking up in recent weeks.
Also viewed as a positive, late-stage biotech company Novavax Inc. NVAX, +14.33% said it has started Phase 1 human trials of its vaccine candidate. The first phase of the placebo-controlled study will enroll 130 healthy adults; the first round of data from that study is expected in July. Big drugmaker Merck & Co. MRK, +0.83% also said it is working on two potential vaccines and an experimental drug against the coronavirus, joining rivals in the frantic search for medicines.
Meanwhile, Japan Prime Minister Shinzo Abe announced plans for another round of stimulus and said total aid from the two packages would exceed 200 trillion yen ($1.86 trillion)
“As is the financial market’s want these days though, even the slimmest of positive news on the COVID-19 front trigger a bullish immune response and another wave of the peak-virus trade,” said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA, in a note to clients.
“U.S. Memorial weekend saw the U.S. out in force enjoying their post lockdown freedoms. Japan in addition to announcing more billions in stimulus, signaled that the final lockdowns over their largest cities are ending,” he said.
U.S.-China relations, however, remain tense. The country on Monday denounced a U.S. move to expand a so-called entity list of Chinese companies, which are restricted from doing business with U.S. firms, for alleged human rights abuses in the Xinjian Uighur Autonomous region.
Meanwhile, White House national security adviser Robert O’Brien warned Sunday that the U.S. will likely sanction China if it carries through with plans for new national security laws in Hong Kong, where protests have reignited. It adds to Washington’s unhappiness over how China has handled the coronavirus outbreak. Also Sunday, China’s foreign minister Wang Yi cautioned against some political forces in the U.S. trying to push the two countries toward a “new Cold War”.
Investors will get fresh U.S. data on Tuesday, with the Case-Shiller home price index due at 9 a.m. Eastern Time and the Conference Board’s consumer confidence index at 10 a.m., along with data on new home sales in April from the Commerce Department.
At 1 p.m. Eastern Time the Minneapolis Fed will hold a webinar featuring bank president Neel Kashkari and former Treasury Secretary Larry Summers.
Which stocks are in focus?
Airline and travel-related stocks were trading higher in heavy premarket volume Tuesday. Shares of Carnival Corp. CCL, +11.03% and Norwegian Cruise Line Holdings Ltd. NCLH, +11.94% were both up more than 10%, while American Airlines Group Inc. AAL, +7.62%, Delta Air Lines Inc. DAL, +8.28% and United Airline Holdings, Inc. UAL, +10.59% were surging between 6.2% and 8%.
Boeing Co. BA, +4.47% stock was leading Dow components in premarket action, up 5.6%.
Shares of AutoZone Inc. were up 3.1% before the start of trade after the auto parts retailer reported fiscal third-quarter profit and sales that beat expectations.
Shares of Take-Two Interactive Software Inc. TTWO, +0.05% were up in premarket trade after BMO Capital Markets analyst Gerrick Johnson upgraded the stock to outperform from market perform.
How are other markets trading?
Crude oil prices CLN20, +3.03% were rising, with the price of a barrel of July West Texas Intermediate crude up $1.15, or 3.5% to $34.39. In precious metals, gold GCN20, -0.52% for June delivery fell $12, or 0.7% to about $1,724 an ounce.
The U.S. dollar fell against a basket of its major rivals, with the ICE U.S. dollar index DXY, -0.79% trading down 0.8%.
Government bond yields were ticking higher, as the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.699% climbed about 3 basis points to 0.69%.
European stocks were trading higher. The Stoxx Europe 600 SXXP, +1.04% was up 1%, while the FTSE 100 UKX, +1.04% was advancing 1.4%. Asian stocks closed higher overnight across the board, led by a 2.8% rally for the Nikkei 225 index NIK, +2.55%. Hong Kong’s Hang Seng Index HSI, +1.88% rose 2%, while the China CSI 300 added 0.9%.
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