MAY 26 — Wall Street was set to surge at the open, with the S&P 500 poised to breach a major technical barrier today as business restarts and optimism about a potential coronavirus vaccine helped investors overlook Sino-US tensions.
Futures pointed to the benchmark index opening above 3,000 points, a key psychological level that could further bolster risk appetite, and also above its 200-day moving average, a closely watched long-term trend indicator.
US biotech group Novavax Inc jumped nearly 16 per cent in premarket trading as it joined the race to test coronavirus vaccine candidates on humans and enrolled its first participants.
Merck & Co Inc advanced 3.6 per cent as it announced plans to develop two separate vaccines.
The S&P 500 has risen about 35 per cent from its March lows on hopes of an eventual coronavirus antidote and easing of virus-related curbs. It is now about 13 per cent below its all-time high hit more than three months ago.
“The markets are focusing more on healthcare related news getting better and the possibility for a vaccine by the end of the year and the potential for increased economic activity as more and more states reopen,” said Art Hogan, chief market strategist at National Securities in New York.
California has decided to reopen in-store retail businesses and places of worship following shutdowns in one of the most restrictive containment rules in the United States.
However, some analysts warned markets might be too fast in pricing a quick recovery from the coronavirus slump that put millions of Americans out of their jobs and virtually halted activity in major sectors.
“Business cycles don’t simply end in two to three months and that’s what the market is pricing,” said Patrick Fruzzetti, managing director and senior research analyst at the Rosenau Group.
“We’re not going to go from 0 to 100 in a matter of couple of months. In a way that some of these sectors are pricing. It’s going to be very slow.”
The beaten down travel-related stocks soared with United Airlines Holdings Inc, online travel agency Expedia Group Inc, hotel operator Marriott International Inc rising between 6 per cent and 8 per cent, while cruise companies including Carnival Corp gained about 10 per cent.
S&P 500 e-minis were up 2.19 per cent at 3,017.75 points at 9:03 a.m. ET (13:03 GMT). The futures contract broke through 2,988.38, a 200-day simple moving average, suggesting a strong day ahead for US stocks.
Dow E-minis were up 618 points, or 2.53 per cent, and the Nasdaq 100 E-minis were up 153.75 points, or 1.63 per cent.
Later in the day, the Conference Board’s data is expected to show consumer confidence index edged up slightly after hitting a six-year low in April. — Reuters
