The stock market has so far ignored civil unrest playing out across America
U.S. stock-index futures looked to extend their gains on Wednesday, a day after major equity benchmarks closed at their early March highs, as investors awaited an important indicator of the labor market’s health.
How are benchmarks performing?
Futures for the Dow Jones Industrial Average YMM20, 0.96% YM00, 0.97% were up 159 points, or 0.6%, at 25,860, those for the S&P 500 index ESM20, 0.61% ES00, 0.61% were trading 12.60 points, or 0.4%, higher at 3,089.50, while Nasdaq-100 futures NQM20, 0.17% NQ00, 0.16% gained 28.50 points to reach 9,676.25, a rise of 0.3%.
On Tuesday, the Dow DJIA, +1.05% rose 267.63 points, or 1.1%, to end at 25,742.65, marking its highest close since March 6, according to Dow Jones Market Data. Meanwhile, the S&P 500 index SPX, +0.82% rose 25.09 points, or 0.8%, closing at 3,080.82, its loftiest finish since March 4, and the Nasdaq Composite Index COMP, +0.59% advanced 56.33 points, or 0.6%, to finish at 9,608.37, representing its best closing level since Feb. 20.
What’s driving the market?
Markets have climbed a virtual wall of worry to head higher over the past several sessions, shrugging of social strife and violent demonstrations in major cities, testiness between the U.S. and China and the economic carnage wrought by a viral pandemic.
On Wednesday, investors will get a fresh read of the impact of efforts to limit the spread of COVID-19, with a report on private-sector employment likely to show that 8.663 million jobs were lost in May, according to Econoday, compared with Automatic Data Processing Inc.’s ADP, +1.85% estimate in April for a loss of 20.236 million. The data, which will be released at 8:15 a.m. Eastern, comes ahead the more closely watched Labor Department report that will be released Friday.
Markets have previously ignored abysmal economic news and a wave of protests across U.S. cities sparked by the death of George Floyd in Minneapolis last week — an unarmed black man who died under the knee of a white police officer. Protests about social injustice in America have resulted in curfews imposed in a number of cities, including New York.
“Social unrest continues across the U.S. resulting in New York, known as ‘The City That Never Sleeps,’ imposing an 8 p.m. curfew today, a full 22 minutes before sunset,” wrote BTIG analysts Julian Emanuel and Michael Chu in a Tuesday research note.
The current bout of civil unrest playing out in America has drawn comparisons to social justice protests in 1968, but the BTIG analysts note that the weakened state of the economy due to the fallout from the viral outbreak makes the situation worse. “GDP growth in 1968 was 4.8%, 2020’s GDP is forecast -5.8%,” the analysts wrote.
Hope for success in businesses reopening has been credited with pushing stocks higher, but analysts say that an unprecedented dose of stimulus from the Federal Reserve has also provided a floor for assets considered risky. Weekly data showed that the Fed’s balance sheet rose to $7.1 trillion as of last Wednesday, up from $7.04 trillion over the prior period. Meanwhile, the U.S. government has injected trillions of dollars more into small businesses and workers to help stem the hardship of store closures.
In addition to labor-market data, investors will watch for a report on the services sector from the Institute for Supply Management at 10 a.m. as well as a report on factory orders at the same time.
Which stocks are in focus?
- Zoom Video Communications Inc. ZM, +1.92% posted record sales and earnings, and expectations for more amid the COVID-19 pandemic. The videoconferencing platform’s shares were up 1.9% in off-hours.
- Campbell Soup Co. shares CPB, +0.56% climbed 3.8% in the premarket session after it reported fiscal third-quarter profit and sales that rose above expectations, and boosted its full-year outlook.
- AMC EntertainmentHoldings Inc. stock AMC, +5.27% was down 1.6% in premarket trading after the cinema chain warned of a first-quarter loss as its theaters stay closed due to the coronavirus.
How are other assets trading?
Oil prices pulled back on Wednesday after finishing at a three-month high on Tuesday, with some doubts about a planned meeting of energy producers creating headwinds. West Texas Intermediate crude for July delivery CLN20, -0.14% retreated 55 cents, or 1.5%, at $36.26 a barrel.
In precious metals, August gold GCM20, -1.10% fell $9.60, or 0.6%, to trade at $1,724.40 an ounce on the New York Mercantile Exchange, looking to add to its 0.9% loss on Tuesday.
In global equities, the Stoxx Europe 600 index SXXP, 1.45% traded 1.3% higher, while the FTSE 100 index UKX, 1.28% advanced 1.2%.
In Asia, Japan’s Nikkei NIK, +1.29% rose 1.3%, the China CSI 300 000300, +0.00% finished virtually unchanged and Hong Kong’s Hang Seng Index HSI, +1.37% rose 1.4%. South Korea’s Kospi index 180721, +2.86% gained 2.9% after the government proposed an extra budget worth $28.9 billion, to ease the economic impact of the coronavirus pandemic.
The 10-year Treasury note yield TMUBMUSD10Y, 0.713% rose 2 basis points to 0.70%. Bond prices move in the opposite direction of yields.
The greenback lost ground against its major rivals, with the ICE U.S. Dollar index DXY, -0.12% down about 0.1% at 97.551.