Stock futures surged on Monday, indicating a sharply higher open on Wall Street, as investors look to extend Friday’s improbable rally on the heels of more regions reopening, and the Federal Reserve pledging more support for the recovery.
On Friday, major benchmarks ended a volatile week on an unexpectedly upbeat note despite a raft of grim data. As states and cities that slowly reactivating public life, hopes for a relatively brisk economic revival are counterbalancing figures that have underscored how badly the coronavirus pandemic has damaged the U.S. economy.
The latest came in the form of April retail sales, which plunged at a startling rate of 16.4% — the worst ever monthly read and initially weighed on Wall Street stocks. Yet by the end of Friday’s session, benchmarks reversed as markets bet on the gradual relaxation of stay-at-home orders that have suffocated the economy.
However, markets have taken comfort in the extraordinary steps the Federal Reserve has taken to shield the economy from the fallout. Federal Reserve Chairman Jerome Powell said the central bank can still do more to soften the economic blow of the coronavirus pandemic, telling CBS’s 60 Minutes that a recovery is possible in the second half of the year.
“There's a lot more we can do,” Powell said. “We've done what we can as we go. But I will say that we're not out of ammunition by a long shot.”
The worse than expected retail data led a number of economists to estimate an even larger than previously anticipated hit for second-quarter growth in gross domestic product (GDP). Economists at Barclays now expect GDP to fall by 42% on an annualized basis in the second quarter, or two percentage points worse than their earlier forecast.
The brisk rally that’s carried stocks off March’s multi-year lows has made some analysts nervous that investors are being too optimistic, given that there’s neither an approved coronavirus treatment or vaccine on the immediate horizon.
Amid rising fears of a potential second wave of infections, Powell said that “assuming there is not a second wave of the coronavirus, I think you will see the economy recover steadily through the second half of this year. For the economy to fully recover people will have to be fully confident and that may have to await the arrival of a vaccine."
The plunge in consumer spending has been amplified by the unprecedented loss of jobs, highlighted by the latest report on initial unemployment claims, which on Thursday showed a greater than expected 2.981 million Americans filed for first-time unemployment benefits last week. This brought the total number of new claims filed since the week ended March 20 to a staggering 36.5 million.
Meanwhile, states across the nation and some countries around the world have begun, or have discussed, a phased reopening of businesses as case growth slows for the coronavirus outbreak. The U.S. Centers for Disease Control and Prevention issued new guidance to inform states how to reopen public spaces including bars, restaurants and offices.
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7:30 a.m. ET Monday: Stock futures soar, point to sharp gains
Stock futures added to overnight gains as more economies reopened and the Fed chair said there’s more the central bank could do to bolster the recovery. The risk rally also included oil, which skyrocketed above $32 per barrel, moving further away from a brutal selloff just weeks ago.
Here were the main moves as of 7:30 a.m. ET:
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S&P 500 futures (ES=F): 2,893.00, up +46.50 or +1.63%
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Dow futures (YM=F): 23,924.00, up +407.00 or +1.73%
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Nasdaq futures (NQ=F): 9,228.75, up +132.25 or +1.45%
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Crude: $32.17, up $2.74 +9.31%
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6:00 p.m. ET Sunday: Stock futures eke out gains
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:00 p.m. ET:
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S&P 500 futures (ES=F): 2,853.00, up +6.50 or +0.23%
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Dow futures (YM=F): 23,568.00, up +51.00 or +0.22%
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Nasdaq futures (NQ=F): 9,119.00, up +22.50 or +0.25%
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