Market Snapshot: Dow futures rise over 300 points as stocks look to build on historic November rally

• The Dow DJIA, -0.90% rose 11.8%, its biggest monthly rise since January 1987 and its biggest November gain since 1928.
• The S&P 500 SPX, -0.46% gained 10.8%, for its biggest monthly advance since April and its largest November rise since 1928.
• The Nasdaq Composite COMP, -0.05% saw an 11.8% gain, its biggest monthly rise since April and best November advance since 2001.
• The small-cap Russell 2000 RUT, -1.91% jumped 18.3%, its largest monthly rise on record.

What’s driving the market?

November gains for equities were tied in large part to optimism over progress toward a COVID-19 vaccine, with three candidates showing promise in late-stage trials. With pharmaceutical manufacturers seeking emergency approval from governments in the U.S and Europe, prospects for widespread distribution by early next year stoked expectations for a broader economic recovery.

As a result investors are looking past a sharp rise in COVID-19 cases in the U.S. and Europe. Some analysts contend the rally is likely to be challenged in coming weeks as worries mount over the economic toll from rising cases amid a lack of additional aid spending out of Washington.

Investors, meanwhile, were likely to pay close attention to congressional testimony Tuesday morning by Federal Reserve Chairman Jerome Powell and U.S.Treasury Secretary Steven Mnuchin. In testimony prepared for delivery at the hearing, Powell said the Fed’s unprecedented steps to stabilize financial markets this year had largely succeeded in restoring the flow of credit from private lenders.

The joint appearance comes after Mnuchin last month unexpectedly told the Fed he wouldn’t extend five lending programs served as a backstop to municipal and corporate debt markets and to purchase loans made to small businesses and nonprofits when they expire on Dec. 31.

“It will be interesting to see what the two officials have to say on the matter, and whether Powell will hint at other ways in stimulating the U.S. economy from a monetary policy front,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note.

The lack of progress toward a new package of spending by Congress could make it more likely the Fed will take additional action in December, Pissouros said. If Powell adds fuel to that view, equities would likely drift north, he said.

It’s also an important day for U.S. economic data. The Markit manufacturing purchasing managers index for November is due at 9:45 a.m. Eastern and the Institute for Supply Management’s November manufacturing index at 10 a.m.

Economists surveyed by MarketWatch expect the ISM gauge to slip to 58% from an October reading of 59.3%. A reading of more than 50% signals an expansion in activity.

Data on October construction spending is also slated for 10 a.m. Economists look for a 1% rise.

Investors will also hear from Fed Gov. Lael Brainard and San Francisco Fed President Mary Daly over the course of the day.

Which companies are in focus?

• Shares of Tesla Inc. TSLA, -3.10% were up 5% in premarket trade after S&P Dow Jones Indices late Monday said it would add the electric vehicle maker to the S&P 500 in one swoop on Dec. 21. Analysts had widely expected the company to be added to the index in tranches.
• Zoom Video Communications Inc. ZM, +1.43% shares fell more than 7%, under pressure despite another blockbuster quarter fueled by the popularity of the company’s videoconferencing software, which has continued to be a lifeline for users during the COVID-19 pandemic.
• In deal news, health care equipment company AdaptHealth Corp. AHCO, +0.37% announced an agreement to buy AeroCare Holdings Inc., a respiratory and home medical equipment distribution company, in a cash and stock deal valued at just over $2 billion.
• Airbnb ABNB, +11.83% set terms for its initial public offering on Tuesday with plans to offer 51.9 million shares priced at $44 to $50 each. The global online-rental platform would raise $2.595 billion at the top of that range. Airbnb has applied to list on Nasdaq under the ticker ‘ABNB.’
• Shares of Exxon Mobil Corp. XOM, -5.12% were up nearly 2% in premarket trade after the oil giant late Monday said it would write down the value of is natural gas assets by $17 billion to $20 billion as it increases its focus on more profitable oil plays.

What are other markets doing?

• The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.874% rose 1.5 basis points to 0.856%, amid signs of expanding international economic activity. Yields and bond prices move in opposite directions.
• The ICE U.S. Dollar Index DXY, -0.23%, which measures the currency against a basket of six major rivals, was off 0.1% a day after dipping to a more-than-two-year low.
• In Asia, the Shanghai Composite Index SHCOMP, +1.77% rose 1.8%, while Hong Kong’s Hang Seng Index HSI, +0.85% gained 0.9% and the Japan’s Nikkei 225 index NIK, +1.33% advanced 1.3%.
• In Europe, the Stoxx 600 Europe index SXXP, +0.70% was up 0.6%, while Londn’s FTSE 100 UKX, +1.74% rallied 1.7%.
• Oil futures edged lower, with the U.S. benchmark CL.1, -0.24% down 0.1% as OPEC+ deferred a meeting in an effort to reach a consensus on whether to extend existing output curbs.
• Gold futures GC00, +1.87% rose 1.7% to trade back above $1,800 an ounce.