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U.S. stock-market indexes climbed on Monday as investors optimism over a quick recovery for the domestic economy, or V-shaped rebound, helped to overcome further evidence of an acceleration of infections of COVID-19 in states and elsewhere in the world.
How are benchmarks performing?
Futures for the Dow Jones Industrial Average YM00, +0.63% YMU20, +0.63% rose 145 points, or 0.6%, to reach 25,674; those for the S&P 500 index ES00, +0.70% ESU20, +0.70% advanced 19.10 points, or 0.6%, at 3,078.50, Nasdaq-100 futures NQU20, +0.88% NQU20, +0.88% added 69.75 points, or 0.7%, at 9,993.25.
On Friday, the Dow DJIA, -0.80% closed 208.64 points lower, down 0.8%, at 25,871.46, after being as much as 371 points higher at an intraday peak at 26,451.44. The S&P 500 index SPX, -0.56% fell 17.60 points, or 0.6%, to close at 3,097.74, but hit an intraday peak at 3,155.53. The Nasdaq Composite Index COMP, +0.03% added 3.07 points, less than 0.1%, to close at 9,946.12.
For the week, the Dow rose 1%, the S&P 500 gained 1.9%, and the Nasdaq returned 3.7%.
What’s driving the market?
Cases of the diseases caused by the novel strain of coronavirus picked up momentum as states and countries continued business reopening efforts over the weekend, but that hasn’t appeared to impede appetite for assets perceived as risky on Wall Street.
“The rise in the infection rate is unlikely to enhance confidence in the markets, but there might come a point where dealers become more accustomed to the situation, as a rise in new cases is the risk a government takes when it reopens their economy,” wrote David Madden, market analyst at CMC Markets UK, in a Monday research note.
There are 24 states that showed an increasing trend in cases this past week, with California, Texas and Florida continuing to leading the way, each with more than 4,000 new cases on Sunday alone, according to data aggregated by Johns Hopkins University. The global tally for COVID-19 rose to just shy of 9 million, according to the day.
Overall, the U.S. continues to lead the world, with the case tally of 2.28 million and death toll of 119,977 more than double the next highest totals of 1.08 million cases and 50,591 deaths in Brazil.
“There are clearly some concerns circulating, but they are nothing like the panic that was seen in February and March,” Madden said.
Meanwhile, Germany’s rate of infection over a four-day average climbed on Sunday and India’s death toll rose by 445, its highest single-day tally, as the country reported 14,821 new cases, according to reports.
Still, New York City will allow companies to reopen their offices on Monday after a three-month lockdown because of the pandemic.
White House trade adviser Peter Navarro said the Trump administration is preparing for a second wave of but isn’t anticipating one. “We don’t necessarily expect a second wave but prudence dictates that we plan for it. There is no contradiction,” he told CNN’s Jake Tapper on CNN’s “State of the Union” on Sunday.
A number of strategists, however, are betting that the economy, will stage a sharp rebound from out of recession, even as signs of infections rising emerge. “History is not on the side of investors expecting anything less than a V-shape,” wrote analysts at Jefferies, led by Sean Darby, global equity strategist, in a research note, who is anticipating improvement in earnings as manufacturing data steadies from coronavirus lows.
Looking ahead, the Federal Reserve will release the results of its annual stress tests on the nation’s largest banks next Thursday Fed has conducted stress tests on the biggest banks every year since 2009 and this year is particularly important in the wake of the coronavirus pandemic.
“The bounce from near all-time lows in CASS shipments, ISM new orders minus inventories etc. is likely to cause S&P 500 earnings revisions to go into positive territory in early July,” referring to a monthly measure of freight shipment activity—Cass freight index—and manufacturing from the Institute for Supply Management.
Looking ahead, investors are watching for a report on business activity in May, the Chicago Fed National Activity Index, due at 8:30 a.m. Eastern Time after a reading for April of minus 16.74. A zero value for the index, which is a weighted average of 85 economic indicators. indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth. Later a report on existing-home sales is due at 10 a.m.
Which stocks are in focus?
- Shares of Apple Inc. AAPL, -0.57% are in focus the iPhone maker this week holds the first-ever virtual version of its Worldwide Developers Conference, an annual event that began in 1987. This year’s edition kicks off at 10 a.m. Pacific time.
- American Airlines Group’s stock AAL, -2.97% was in focus after the air carrier announced Sunday that it would raise $3.5 billion in new financing.
