Dow futures rose 100 points after last week’s big market affair

Traders work on the floor of the New York Stock Exchange.

Source: NYSE

US stock futures rose on Sunday night as traders assessed a sharp market rotation that led to mixed weekly performance last week.

The Dow Jones Industrial Average futures gained 101 points, or 0.3%. S&P 500 futures traded up 0.5% and Nasdaq 100 futures gained 0.6%.

The S&P 500 posted a record closing on Friday and gained 2.2% in a week. The Dow rallied over 4% last week and briefly broke a record last week. However the Nasdaq Composite dropped 0.6%.

Traders piled up beaten-down value names at the expense of high-flying growth stocks amid positive vaccine news. The iShares Russell 1000 Value Exchange-Traded Fund (IWD) gained 5.7% last week, while its growth counterparty, the iShares Russell 1000 Growth ETF (IWF) slipped 1.2%.

Pfizer and BioNTech said last week that their coronavirus vaccine candidate Kovid-19 was more than 90% effective at stopping participants in late-stage testing. The news raised hopes of an economic recovery, thus making value stocks like United Airlines and Carnival Corp more attractive. United and Carnival rallied 12.4% and 15.9% respectively last week.

TS Lombard analysts Steven Blitz and Andrea Andrea Scioni wrote in a note, “The announcement of an effective Kovid-19 vaccine by Pfizer / Bioentech last week was so significant that we almost forgot that the US presidential election was yet to happen.”

“Vaccine turns that can occur into a protracted crisis close to a natural disaster (major setbacks, rapid recovery),” he said. “Without an effective vaccine, current EPS consensus expectations (pointing to a return to trend by the end of next year) will be on the optimistic side. But with one, they may actually pass.”

To be sure, the number of coronovirus cases is still increasing, thus threatening the prospects of a rapid economic recovery.

According to Johns Hopkins University data, more than 11 million Kovid-19 infections have been confirmed in the US. Data from the COVID tracking project also showed that more than 68,500 people in the US were hospitalized with coronovirus records.

Dan Russo, chief market strategist at Chanin Analytics, thinks the market may turn around this latest spike in coronovirus cases.

“It seems investors are more focused on vaccine news and are keen to see a near-term spike in cases,” he said. “If it becomes a cause of concern for investors, it will become clear on the chart and take on risk management.”

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