Dow Jones Industrial Average futures implied a gain of more than 200 points at the open. S&P 500 and Nasdaq 100 futures also traded higher.
The overnight action followed a strong performance in technology shares on Monday that pushed the Nasdaq up 2.5%. Amazon led the gains in popular tech names with a 7.9% jump on Monday, its best day since December 2018. The Nasdaq 100, which consists of the 100 biggest non-financial companies in the composite, popped 2.8% for its biggest one-day gain since April.
IBM gained 4.7% in extended trading after the company reported better-than-expected second-quarter earnings. Notably, IBM improved gross margins in three of its five units in the past quarter.
“We expect robust growth-company balance sheets and low interest rates to support higher valuations for growth stocks than for value stocks in the near term,” Ken Johnson, Wells Fargo’s investment strategy analyst, said in a note on Monday.
The market also cheered a slew of positive news on the vaccine front. Pfizer and BioNTech reported early positive data on a joint coronavirus vaccine. Meanwhile, another candidate from Oxford University and AstraZeneca showed a positive immune response in an early trial.
In earnings news, Coca-Cola profit fell 33% in the second quarter, but the company expressed optimism on demand as lockdown measures associated with the coronavirus were lifted. Shares rose nearly 1% in premarket trading.
Tesla rose another 3% Tuesday morning as the automaker remains on a tear ahead of its earnings report Wednesday.
With Monday’s gains on Wall Street, the S&P 500 turned green for 2020 with a 0.6% gain on the year, while the Nasdaq has risen 20% this year. The 30-stock Dow lagged, however, down 6.5% for 2020.
Investors are also monitoring the talks in Washington on the next coronavirus relief bill. Lawmakers face pressure to pass legislation before the end of the month, when the $600 per week federal unemployment insurance benefit is set to expire.
“I believe the stock market would benefit from news of a stimulus package coming to fruition,” Kristina Hooper, Invesco’s chief global market strategist, said in a note on Monday. “In times like this, despite a massive and rising budget deficit for the US, I believe big government is likely to be good news for the stock market.”
More companies will report quarterly earnings on Wednesday. In addition to Coca-Cola earnings, Philip Morris is set to drop results before the bell, while United Airlines will report after the close.