Before The Bell - U.S. stocks began the holiday-shortened trading week with a sharp move higher. Strong housing data helped kick start the day into high gear. Specifically, the National Association of Realtors reported that pending home sales for May catapulted 44.3% higher versus April’s figures, nearly triple what the market expected. However, sales were still down 5.1% from where they were a year earlier.
This good news was enough to outweigh concerns over COVID-19 flare-ups in several states, which forced local governments to put reopening plans on hold, or even take a few steps back. Notably, new cases in the U.S. notched a new record on Friday, suggesting that the contagion is not under control, and that the economic recovery won’t be as quick as many have hoped.
The Dow Jones Industrials ended the session up 580 points, or 2.3%, with a big assist coming from Boeing (BA). Shares of the aircraft manufacturer moved sharply higher after the Federal Aviation Administration gave the go-ahead to begin flight tests on the company’s grounded 737 Max planes. Meanwhile, the broader S&P 500 moved 44 points higher (1.5%) while the tech-heavy NASDAQ added 116 points (1.2%). However, it was small-cap stocks that ruled the day, with the Russell 2000 gaining 3.1% on the session. All of the major market sectors were firmly in positive territory, with the biggest gains coming from industrials (2.7%), utilities (1.9%), and basic materials (1.8%). Altogether, advancing issues led decliners by more than three to one.
Elsewhere oil prices also moved higher, with light sweet crude up 2.9%, to about $39.60 a barrel. Prices received a boost from word that industry in China (the world’s largest importer of oil) showed a year-over-year profit increase of 6% in May. The commodity is up more than 12% over the past 30 days, however, it’s still off by nearly 32% versus a year ago. Meanwhile, the European bourses also had an up day. Germany’s DAX gained 1.2%, the U.K. FTSE 100 advanced 1.1%, and France’s CAC-40 was ahead by .7%.
As we look to the new day, stocks in Asian markets closed with solid gains, and the European bourses are trading in mixed fashion, but mostly up. Meanwhile, U.S. stock futures are suggesting the major indexes will open with a modest decline, and crude oil prices are down nearly 2%. Elsewhere, China continues to show signs of recovery, with manufacturing and services activity both increasing for June.
This morning, we’ll get the latest on the consumer confidence index, while tomorrow’s economic reports include ADP’s employment report and the Institute for Supply Management’s manufacturing index for June. These will be followed by nonfarm payrolls and factory orders on Thursday, a day earlier than usual due to the July 4th holiday weekend. – Mario Ferro