U.S. stock futures rose in early trading on Wednesday as markets continued to rally on optimism over economies emerging from coronavirus-led shutdowns.
Dow futures implied an opening gain of about 180 points. Futures for the S&P 500 and Nasdaq were also up, pointing to a positive start for the two indexes.
On Tuesday, stocks rose as optimism around reopening businesses overshadowed concerns about the global pandemic, U.S.-China trade tensions and nationwide protests. Equities got an extra boost in the final hour of trading and closed around their session highs.
“Despite several issues of importance — national riots, Chinese relations, an ongoing pandemic — the stock market is primarily focused on a single thing: the restart of U.S. and global economic activities,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.
The Dow Jones Industrial Average climbed 267 points, or 1.05%. The S&P 500 also registered a gain, climbing 0.82%.
Stocks tied to the reopening of states outperformed. Citigroup, Wells Fargo and Bank of America all rose at least 0.9%. Gap climbed 7.7%. Southwest gained 2.6%. Mall and shopping center operators saw robust gains on Tuesday.
The Nasdaq Composite was the relative underperformer, gaining 0.6% as investors focused on the economic reopening and rotated out of the stay-at-home plays.
“The broader stock market (i.e., small cap stocks, cyclical sectors, international stock markets and emerging stock markets) is increasingly participating more pronouncedly in this rally suggesting the recession is ending,” Paulsen added.
Stocks have continued their trek upward as risk appetite grows on optimism that the worst of the economic downturn from the spread of the coronavirus is in the past. Gains in June follow back-to-back monthly increases in April and May for U.S. equities.
The Dow is now up more than 41% from its 52-week low on March 23. The S&P 500 has rallied more than 40% and the Nasdaq Composite is up nearly 45% since then.
Wharton professor Jeremy Siegel said the stock market rally still has further to go thanks to the massive support from the Federal Reserve.
“I think this rally has further to go. It has all those doubters there but it’s the liquidity that the Fed provided that I think is the prime determinant,” Siegel said on CNBC’s “Closing Bell.”
While stocks have largely shrugged off unrest around the country, federal and local governments are taking action. Major cities like New York and Chicago have imposed curfews in an effort to dissipate the mass gatherings. President Donald Trump said Monday night he will deploy the military if states and cities failed to quell the demonstrations.
On Wednesday, the ADP private sector jobs report will be released at 8:30 a.m. Analysts polled by FactSet are expecting a loss of 8.75 million jobs in May. This comes after payrolls hemorrhaged more than 20 million jobs in April as companies sliced workers amid a coronavirus-induced shutdown that took most of the U.S. economy offline. April marked the worst job loss in the history of the ADP report.
Markit Services PMI and ISM Non-manufacturing survey will also come out before the bell on Wednesday.
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