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Alba Iulia
Thursday, May 28, 2020

Equity futures rise after rebound of hope that pandemic will stabilize

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Equity futures rose on Monday evening after a strong rebound in the previous session as investors hoped more that the peak of coronavirus cases could be reached soon.

Futures contracts on the Dow Jones Industrial Average rose approximately 125 points. The S&P 500 and Nasdaq futures contracts also traded higher.

Stocks jumped Monday as a series of headlines about coronaviruses indicated potential stabilization in the United States. The Dow climbed 1600 points, posting its third biggest point gain. The S&P 500 jumped 7% to its highest level since March 13. With Monday’s rally, the S&P 500 rebounded about 20% from its 52-week low on March 23.

President Donald Trump said at a press conference on Monday there is “a huge light at the end of the tunnel” with ten different therapeutic agents in active trials. Trump echoed comments from officials at the World Health Organization who said that research to develop vaccines and treatments had “accelerated at an incredible speed.”

Investors have been appeased by weekend data showing slowdown the number of daily cases of coronavirus in the United States, although it is still early to determine a lasting trend. The death toll in some of the coronavirus hotspots around the world, including Spain and Italy, showed signs of easing. New York State, the hardest hit region in the United States, also announced on Sunday its first decline in daily confirmed deaths.

“The New York state summit is likely to be around a month away,” Marko Kolanovic, global head of macro quantitative derivatives and derivatives at JPMorgan, said in a note on Monday. “Big data indicated early on that social distancing works on the whole.”

In the middle of Monday’s rally, Wall Street’s fear gauge the Cboe volatility index fell 3.3% to 45.24, the lowest level in about two weeks. Three weeks ago, the VIX hit a record low of 82.69, surpassing the record level of the financial crisis.

Yet, according to data from Johns Hopkins University, cases in the United States, the most affected country in the world, have exceeded 347,000 with at least 10,000 deaths.

“We still think the odds are high enough that the March lows will be tested again and probably undervalued before the end of this bear market,” said Matt Maley, chief market strategist at Miller, in a note. Tabak.

Stocks are still in bearish territory with the S&P 500 at around 21.5% of its record. Many on Wall Street believe that the stocks did not fully take into account the potential collapse in corporate profits, as the coronavirus epidemic has practically stopped the global economy.

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