Before The Bell - After Thursday's constructive session, the U.S. equity futures are suggesting some profit taking at the open this morning. Stay tuned.
Wall Street resumed its winning ways yesterday morning following a late selloff on Tuesday afternoon, which had left the Dow Jones Industrial Average with a loss of 390 points for the day. The latest session, though, began on a stronger note, with sentiment lifted by some positive results in the retail space. Also, the Street's mood was lifted by the fact that two major equity players, Amazon.com (AMZN) and Facebook (FB), saw their stocks hit all-time highs. As the morning concluded, the Dow was ahead by close to 400 points.
In general, the equity market has been on the recovery trail for some weeks now, as optimism builds that the U.S. economy can continue to reopen after the corona-induced lockdowns that started in mid-to-late March. As to the retailers' profits that buoyed sentiment, the good news came from Target (TGT) and Lowe's (LOW). But, overall, the market's strong showing reflected the rapid pace of the re-openings, where, at this time, all 50 states have some measures for doing that in place.
Meanwhile, although the President has indicated that he expects “a really great third quarter,” Federal Reserve Chairman Jerome Powell notes that he thinks that a recovery may have to wait until the end of next year. Also helping the market was the fact that the Energy Information Administration reported yesterday morning that U.S. crude oil inventories fell in the week ended May 15th, the second weekly drop in a row. West Texas Intermediate crude oil rose nearly 5%, to more than $33 a barrel, in response.
After this solid first half to the trading day, stocks continued to press forward throughout the afternoon, although the market did not advance much further, staying, instead, in a narrow and rather stable uptrend. All told, the Dow would climb by 369 points; the S&P 500 would add 49 points; and the NASDAQ, on strength in some big name tech-related names would lead the way higher with an advance of 190 points. The NASDAQ now is within some 500 points of its all-time highs set earlier this year.
In sum, the market pressed higher yesterday on the reopening optimism as well as on hopes that a vaccine for COVID-19 would soon be found as another potential entrant into this arena surfaced, two days after Moderna (MRNA) entered the fray. That issue edged higher yesterday following a seesaw pattern the previous two sessions. We think additional candidates will emerge in the coming days, weeks, and months, as the battle to combat COVID-19 continues. - Harvey S. Katz, CFA