Dow Jones Industrial Average futures dipped 5 points, suggesting an opening decline of just around 31 points when regular trading resumes on Tuesday. S&P 500 and Nasdaq-100 futures also pointed to a little changed Tuesday open.
The moves early Tuesday morning followed sharp gains on Wall Street on Monday as the S&P 500 returned to positive territory for 2020 as fears over the coronavirus continued to give way to optimism about the reopening of the American economy.
The Nasdaq Composite gained 1.1% on Monday and hit its own fresh high, bringing its year-to-date advance to 10.6%. The Dow Jones Industrial Average, meanwhile, added 461 points, or 1.7%, trimming its year-to-date losses to just 3.3%.
Traders say the market’s hot streak over the last two months is in large part thanks to confidence about the reopening of the U.S. economy and a barrage of government stimulus.
“Recent datapoints like the jobs report and not-as-bad-as-feared company updates have fueled the view that the worst of the declines could be behind us,” a team of RBC Captial Markets anaylysts told clients Monday. “The risk-on trade really is gaining traction. Valuations have spiked to historical highs in many industrial sub-sectors, signaling a strong recovery is potentially taking hold.”
Market optimists pointed to improving economic signals for the most recent rallies, including the government’s far-better-than-expected jobs report last week. The Labor Department said Friday the economy added 2.5 million jobs in May, a record. Economists polled by Dow Jones had forecast a drop of more than 8 million.
All in, the S&P 500 is up 10.3% over the last month and 8.75% over the last three months. Much of those gains have been thanks to the so-called reopening trade, those stock that would benefit the most if all the Covid-19 precations and business closures were removed.
Airline shares, which swooned in March amid travel restrictions and contagion fears, have been one of strongest groups of late. Delta, United and American Airlines are up 62.7%, 91.5% and 100.3% over the last month alone. Another “reopening” group, cruise line operators Carnival and Norwegian Cruise Line are up 75.3% and 116% over the same period.
Netflix — a stock that benefited from people staying at home and has underperformed in recent weeks — slid 0.3% on Monday and added to a 3.69% loss for the month. Amazon — up 6% over the last 30 days — is also underperforming the S&P 500 over the last month, up 6.07% versus the market’s 10.3%.
Job openings data and small-business optimism numbers await investors on Tuesday while companies Chewy, GameStop and Tiffany are slated to reported quarterly earnings.