Stock futures rose in early morning trading on Monday as investors looked past a record spike in coronavirus cases in Florida.market
Futures on the Dow Jones Industrial Average gained 185 points, pointing to a more than 200-point gain at Monday’s open. The S&P 500 futures and the Nasdaq 100 futures contracts also pointed to a positive Monday start for the two indexes.
Florida reported 15,299 new coronavirus cases on Sunday, the highest single day total for any U.S. state since the pandemic began. Meanwhile, the U.S. has reported more than 60,000 new cases daily for three days in a row now, bringing the national total to more than 3 million cases, according to data from Johns Hopkins University.
“COVID remains a huge problem w/cases, hospitalizations, and fatalities all climbing,” Vital Knowledge founder Adam Crisafulli said in a note on Sunday. “The market continues to absorb all this information relatively well and this seems to be a function of vaccine hopes, lower fatality rates vs. Mar/April, the avoidance of wholesale lockdowns, and the lack of a resurgence in the Northeast (esp. NYC).”
The Dow and the S&P 500 are coming off two consecutive weeks of gains, while the resilience in tech shares pushed the Nasdaq to a new record after three straight positive weeks. For July, the Dow and the S&P 500 have risen 1.0% and 2.7%, respectively. The tech-heavy Nasdaq outperformed, climbing 10.7% this month as Amazon, Apple, Netflix, Alphabet all reclaimed new highs.
“The overall rally is still very narrow…and several of the high flying mega-cap stocks are becoming overbought (and more over-valued),” Matthew Maley, chief market strategist at Miller Tabak, said in a note on Sunday. “Therefore, we HAVE to wait to see if the key resistance level on the S&P is indeed broken to the upside before we can confirm that another rally leg in the broad stock market has begun.”
Earnings season is set to kick off this week with big banks and others reporting their quarterly results. JPMorgan, Citigroup and Wells Fargo are scheduled to report on Tuesday. Pepsi will report earnings on Monday before the market open.
Corporate profits are expected to fall by 44% in the second quarter, which would be the biggest drop in quarterly earnings since the fourth quarter of 2008, according to Refinitiv data. However, the market could shrug off the sharp profit decline as long as companies signal a recovery on the horizon.
After the S&P 500′s best quarter in more than 20 years, the broad market’s comeback rally has slowed down amid fears of a worsening pandemic. Still, the equity benchmark is now down just 1.4% year to date, sitting about 6% off its February record.
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