Tuesday April 7th

7-04-2020

Dow futures rally more than 700 points, adding to Monday’s sharp gains

U.S. stock index futures pointed to a Tuesday opening jump in early morning trade, building on a steep rebound in the previous session. At around 8 a.m. ET, futures for the Dow Jones Industrial Average jumped 762 points, pointing to a gain of more than 600 points at Tuesday’s open. S&P 500 futures and Nasdaq futures also pointed to strong opening gains. “Investors chose to accentuate the positives, as they have been mostly doing since the bear-market low,” said Ed Yardeni, president and chief investment strategist at Yardeni Research, in a note to clients. “In our opinion, we are in the midst of a Great Rebalancing away from bonds and into stocks.” “The bear market has most likely discounted a depression-like recession packed into Q2 and Q3,” he said. “It certainly hasn’t discounted the possibility of an actual apocalyptic depression lasting through at least 2021 and beyond. On the contrary, the market’s recent action suggests that investors are betting on an economic recovery starting during Q4 and continuing through 2021.” Carnival, Norwegian Cruise Line and Royal Caribbean all surged more than 14% in the premarket. United Airlines and MGM Resorts jumped more than 10% each. Boeing, Dow Inc and Raytheon Technologies all traded at least 6%. The move higher came after a series of positive coronavirus developments from around the world. Stocks surged on Monday as a slew of coronavirus headlines pointed to a potential stabilization in the U.S. The Dow soared 1,600 points, posting its third biggest point gain ever. The S&P 500 jumped 7% to its highest level since March 13. With Monday’s rally, the S&P 500 bounced about 20% from its 52-week low on March 23. President Donald Trump said in a press conference Monday there’s “tremendous light at the end of the tunnel’ with ten different therapeutic agents in active trials. Trump echoed comments by World Health Organization officials who said the research to develop vaccines and treatments has “accelerated at incredible speed.” Amid Monday’s rally, Wall Street’s fear gauge the Cboe Volatility Index fell 3.3% to 45.24, the lowest level in about two weeks. Three weeks ago, the VIX hit a record high of 82.69, surpassing the peak level during the financial crisis. “We still believe that the odds are quite high that the lows from March will be retested and probably undercut before this bear market comes to an end,” Matt Maley, chief market strategist at Miller Tabak, said in a note on Monday. Stocks are still in bear-market territory with the S&P 500 about 21.5% off its record high. Many on Wall Street believe stocks haven’t fully priced in the potential corporate earnings collapse as the coronavirus outbreak have virtually shut down the global economy. Stocks in Asia rose on Tuesday on rising hopes the spread of the global coronavirus pandemic may be slowing. Mainland Chinese stocks, which returned to trade following a Monday holiday, led gains among the region’s major markets. The Shenzhen composite surged 3.184% to about 1,743.37 while the Shenzhen component added 3.15% to 10,428.91. The Shanghai composite was also up 2.05% to around 2,820.76. Hong Kong’s Hang Seng index rose 1.88%, as of its final hour of trading. In Japan, the Nikkei 225 gained 2.01% to close at 18,950.18 while the Topix index gained 1.96% to end its trading day at 1,403.21. Over in South Korea, the Kospi rose 1.77% to close at 1,823.60. Oil prices clawed their way into positive territory on Tuesday as hopes that the world’s biggest producers will agree to cut output outweighed analyst fears that a global recession in the wake of the coronavirus crisis could be deeper than expected. Brent crude was up 83 cents, or 2.5%, at $33.88 a barrel by 0936 GMT after falling more than 3% on Monday. West Texas Intermediate (WTI) crude was up 95 cents, or 3.6%, at $27.03, having dropped nearly 8% in the previous session. Gold prices fell 1% on Tuesday, retreating from a one-month high hit earlier in the session as risk sentiment improved on wider market optimism after there were tentative signs of progress against coronavirus outbreaks in some countries. Spot gold was down 0.5% at $1,653.25 per ounce by 1024 GMT after rising to a one-month high of $1,671.40. The metal had risen as much as 2.8% on Monday.