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U.S. stock-index futures traded sharply higher early Wednesday, building on the previous session’s strong gains on optimism over efforts to reopen the economy and the prospects for a vaccine against the coronavirus.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YM00, +1.34% rose 348 points, or 1.4%, to 25,350, while S&P 500 futures ES00, +1.04% were up 34.10 points, or 1.1%, at 3,028.50. Nasdaq-100 futures NQ00, +0.45% traded at 9,452., up 45.50 points, or 0.5%.
On Tuesday the Dow DJIA, +2.16% jumped 529.95 points or 2.2%, to finish at 24,995.11, while the S&P SPX, +1.22% advanced 36.32 points, or 1.2%, to end at 2,991.77, after briefly breaching the 3,000 level for the first time since March 5. The Nasdaq Composite COMP, +0.16% finished at 9,340.22, up 15.63 points, or 0.2%.
What’s driving the stock market
The stock market’s rise is being fueled largely by the gradual rollback of lockdown measures across the U.S. and much of Europe imposed to combat the spread of the coronavirus pandemic, analysts said. Major monetary and fiscal stimulus efforts by central banks and governments have also served to underpin equities, while traders are looking past rising U.S.-China tensions and the threat of a second wave of COVID-19 infections.
Need to Know: Amazon and other stay-at-home stocks are starting to stall. They may hold the key to the market, strategist says.
“More people are returning to work, a greater number of shops are preparing to reopen and society has quickly become accustomed to social distancing measures. This shift in behavior sends a positive signal to markets as it helps to remove layers of uncertainty which have been hanging over share prices,” said Russ Mould, investment director at AJ Bell, in a note.
Meanwhile, the European Union is on track to announce a €750 billion ($823 billion) stimulus package, news reports said. Citing an official with knowledge of the plan, Bloomberg reported that the package would be split between €500 billion loans and €250 billion grants, funded by borrowing on financial markets.
But some market watchers worried that investors are getting ahead of themselves.
Escalating tensions in Hong Kong and deteriorating U.S.-China relations shouldn’t be ignored, said Fawad Razaqzada, market analyst with ThinkMarkets, in a note. President Donald Trump has said he would make an announcement by the end of the week regarding China’s efforts to impose new security laws that would undercut Hong Kong’s autonomy.
That could be a catalyst for a “risk-off” move in markets, requiring traders to remain nimble, he said.
U.S. lawmakers are also pushing ahead with legislation that would require all companies listed on U.S. stock exchanges submit to audits reviewable by the U.S. Public Company Accounting Oversight Board — a move seen potentially forcing a number of Chinese companies to delist.
It’s a relatively quiet day on the economic calendar. St. Louis Federal Reserve Bank President James Bullard is scheduled to deliver remarks at 12:30 p.m. Eastern.
The Fed will release its Beige Book report, a collection of economic anecdotes across its regions, at 2 p.m. Eastern.
Which companies are in focus?
- Shares of previously beaten down travel companies saw strong gains Tuesday and were on track for further gains. Cruise-line operator Carnival Corp. CCL, +12.58% shares were up 15% in premarket activity, while United Airlines Holdings Inc. UAL, +16.29% rose 8.8%.
