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Stock-index futures were mostly higher Thursday, a day after a rally tied to optimism over efforts to reopen the economy in the wake of the COVID-19 lockdowns pushed stocks to their highest levels since early March.
Traders said concerns over rising U.S.-China tensions, which have been largely ignored so far, remain in the background but could cap gains.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YM00, +0.61% were up 147 points, or 0.6%, at 25,681, while S&P 500 futures ES00, +0.20% were up nearly 6 points, or 0.2%, to 3,042. Nasdaq-100 futures NQ00, -0.46% were off nearly 32 points, or 0.3%, at 9,401.
The Dow DJIA, +2.21% ended Wednesday with a gain of 553.16 points, or 2.2%, at 25,548.27, while the S&P 500 SPX, +1.48% rose 44.36 points, or 1.5%, to finish at 3,036.13. The Nasdaq Composite Index COMP, +0.77% advanced 72.14 points, or 0.8%, finishing at 9,412.36.
The gains saw the S&P 500, which fell 34% from its all-time closing high on Feb. 19 to its March 23 low, finish just 10.3% away from its all-time high. The S&P 500 and Dow closed at their highest levels since early March, while the Nasdaq saw its highest close since Feb. 20.
See:The Dow just punched above an important line in the sand that may signal that a record high is next
What’s driving the market?
Optimism over the reopening of the economy was on display as shares of technology companies lagged behind after leading the bounce back from March 23 lows on expectations they would be most insulated or even benefit from the lockdown, analysts said.
Wednesday’s move higher “was not driven by momentum and growth stocks but value ones. Financials, industrials, telecoms and consumer non-cyclicals were the drivers of yesterday’s rally, while the tech sector was the laggard,” said Hussein Sayed, chief market strategist at FXTM, in a note.
While stocks appear expensive based on forward earnings estimates, “what seems to be priced in at this stage is the economy will recover much faster than previously estimated, the pandemic will soon end and life return back to normal,” he said.
Meanwhile, U.S.-China tensions remain a worry. China’s ceremonial legislature approved a resolution that would impose new national-security laws on Hong Kong, compromising the territory’s partial autonomy in an effort to crush protests against the Chinese government.
The U.S. on Wednesday said it no longer considered Hong Kong highly autonomous under a 1992 law, a move that could lead to measures to limit Hong Kong’s trade privileges and open the door to sanctions against individuals the U.S. sees as suppressing civil liberties in the territory.
Capitol Report:Revoking Hong Kong’s special status is Trump’s ‘nuclear option’ that could trigger irrevocable U.S.-China split, analysts warn
The U.S. economic calendar features weekly jobless claims data at 8:30 a.m. Eastern. The pace of job losses is expected to remain historically brutal, but first-time claims are expected to continue subsiding. Economists surveyed by MarketWatch forecast the seasonally adjusted number of initial claims in the week ended May 23 to fall to 2.12 million versus 2.44 million the previous week. Last week, the unadjusted number, which economists consider more significant given the extraordinary circumstances surrounding the downturn, was 3.3 million.
A second estimate of first-quarter gross domestic product is also due at 8:30 a.m., with economists looking for the data to continue to show a 4.8% annualized fall. Meanwhile, a reading on April durable-goods sales is expected to show an 18.2% monthly fall, while the core figure is expected to drop 15%. April pending-home-sales figures are due at 10 a.m. Eastern.
New York Federal Reserve Bank President John Williams is slated to speak at 11 a.m. Eastern, while Philadelphia Fed President Patrick Harker is scheduled to make remarks at 3 p.m. Eastern.
Which companies are in focus?
- Shares of social media companies were in the spotlight after President Donald Trump said he would sign an executive order aimed at the platforms after Twitter Inc. TWTR, -2.76% on Tuesday applied a fact-checking notice to his tweets about voter fraud. The Wall Street Journal reported that a draft of an executive order would seek to limit the broad legal protection currently provided to social media and other platforms under federal law. Twitter shares fell 3.8% in premarket trade, while Facebook Inc. FB, -1.31% shares were off 1.1%.
- Dollar General Corp. DG, +3.79% shares were higher in premarket action after the company beat estimates amid hearty demand for discount goods.
- Lumber Liquidators Holdings Inc. LL, +9.01% shares jumped 9% in early action after its profit beat analyst expectations.
- Burlington Stores Inc. BURL, +0.70% shares fell 2.5% before the bell after reporting a wider loss than expected.
How are other markets trading?
In global equities, the Stoxx Europe 600 SXXP, +1.16% index was 1.1% higher. In Asia, the Nikkei NIK, +2.32% added 2.3%, and Hong Kong’s Hang Seng index HSI, -0.72% closed 0.7% lower.
The 10-year Treasury note yield TMUBMUSD10Y, 0.684% ticked down to 0.682%. Bond prices move in the opposite direction of yields.
The greenback lost ground against its major rivals, with the ICE U.S. Dollar index DXY, -0.10% down about 0.1%.
West Texas Intermediate crude futures for July delivery CLN20, +0.06% fell about 22 cents to $32.59. June gold GCM20, +0.59% gained about 0.8% to trade at $1,724.90 an ounce on the New York Mercantile Exchange.
See:Out-of-whack stock and bond prices say something troubling about the coronavirus economy
