Market Snapshot: Dow futures surge as Wall Street holds out hope for coronavirus rescue plan

U.S. stock-index futures surged Tuesday morning, trading at the highest allowable level for much of the premarket session, as optimism over efforts to rescue the economy grew amid reports that lawmakers were getting closer to a deal on a large fiscal stimulus package.

How are benchmarks performing?

Futures for the Dow Jones Industrial Average

YMM20, +5.03%

rose 780 points, a rise of 4.2%, to reach 19,302, those for the S&P 500 index

ESM20, +5.09%

advanced 96 points, or 4.2%, to trade at 2,313, while Nasdaq-100 futures

NQM20, +5.37%

 gained 300 points, or 4.3%, at 7,283.

Earlier in off-hours trade, all three futures contracts had hit their limits of a 5% gain.

On Monday, the Dow

DJIA, -3.04%

tumbled 582.05 points, or 3%, to settle at 18,591.93, its lowest reading since Nov. 9, 2016, the day of President Donald Trump’s election. The S&P 500

SPX, -2.93%

 slipped 67.52 points, or 2.9%, to close at 2,237.40 points. The Nasdaq Composite Index

COMP, -0.27%

 shed 18.84 points, or 0.3%, to end at 6,860.67.

What’s driving the market?

U.S. lawmakers inched toward an agreement on a roughly $2 trillion coronavirus rescue package, according to a report by the Washington Post, helping to reignite the buying appetite on Wall Street for the moment, after lawmakers on Monday twice failed to reach an agreement, sending stocks into a fresh tailspin.

Senate Minority Leader Chuck Schumer said from the Senate floor that he had “very good” discussions with U.S. Treasury Secretary Steven Mnuchin, who is leading the talks on the Republican side, and that the list of outstanding issues has narrowed “significantly.”

“Political fighting in the US has prevented a stimulus scheme from being revealed earlier, but dealers are optimistic nonetheless,” wrote David Madden, market analyst at CMC Markets UK, in a daily note.

Losses on Monday came even after the Federal Reserve unfurled its most potent batch of stimulus measures to date, saying it would buy an unlimited amount of Treasurys and mortgage-backed securities, among other measures, to stem the harm from the virus and unlock seized up areas of financial markets.

Markets across the globe have been reeling from planned, temporary business shutdowns, including that of Spain, the U.K., and Italy, to mitigate the spread of COVID-19, the infectious disease that is derived from a novel strain of coronavirus, and which has infected 390,000 people globally since it was first identified in December.

The intentional lockdowns are expected to drive much of the world, including the U.S., into a recession.

However, President Donald Trump on Tuesday has floated the idea of restarting the economy soon to limit the damage to small and medium-size businesses, a notion that has run against the advice of his coterie of health advisers. That idea may partly be heartening some staunch stock-market bulls, despite the implications of more rapid spread of the illness and a higher death toll.

Meanwhile, reports that the outbreak was peaking in Europe also offered some glimmers of hope for market bulls. Indeed, both new cases and deaths have dropped for two days in Italy, and the head of Germany’s public health institute said the infections rate in Europe’s largest economy was leveling off.

Also read: Goldman Sachs says it is time to buy gold — the ‘currency of last resort’

“Sensibly, investors are now actively seeking these ‘new world’ sectors and companies in order to grow and protect their wealth.,” wrote Nigel Green, chief executive of deVere Group, an independent financial advisory firm, in a Tuesday note.

Looking ahead, in economic reports, the IHS Markit releases its U.S. Purchasing Managers’ Index for March at 9:45 a.m. Eastern Time. Expectations are for a 49 reading, down from February’s 49.6 figure. After that, the new residential home sales for February are due at 10 a.m. Economists forecast a seasonally adjusted annual rate of 740,000 homes sold. That estimate would be down 3.1% from January’s 764,000 rate.

See also: Here’s a breakdown of the Fed’s expanded rescue programs to keep credit flowing during the pandemic

Which stocks are in focus?
  • Shares of Phillips 66

    PSX, -12.95%

     could be in focus on Tuesday after the oil company said that it secured a $1 billion term loan, cut its capital expenditures for 2020 and temporarily suspended share buybacks.

  • Chevron Corp.’s shares

    CVX, -8.71%

    also could be in focus after the oil giant said it would cut its 2020 capex by $4 billion and temporarily halt share repurchases.

  • Micron Technology Inc.

    MU, +5.93%

    is scheduled to report fiscal second-quarter earnings after the bell on Wednesday.

  • Nike

    NKE, -6.89%

    is slated to report quarterly results on Tuesday.

How are other markets trading?

In bond markets, the yield on the 10-year U.S. Treasury note

TMUBMUSD10Y, +9.18%

 rose about 8 basis points, to 0.84%.

Crude oil rose, with the price of a barrel of West Texas Intermediate crude

CL.1, +3.51%

 up 65 cents, or 2.7% to $24. In precious metals, gold

GCJ20, +6.70%

 surged by about $92, or 5.9% to trade at 1,659.30 an ounce.

European stocks were in rally mode, as the Stoxx Europe 600

SXXP, +5.35%

 gained 4.9%.

In Asia overnight, stocks closed higher, with the China CSI 300

000300, +2.69%

 up 2.7%, Hong Kong’s Hang Seng index

HSI, +4.46%

 adding 4.5% and Japan’s Nikkei 225

NIK, +7.13%

 ending the session 7.1% higher.

The U.S. dollar traded lower, compared to a basket of its major peers. The ICE U.S. dollar index

DXY, -1.03%

 was down 0.8%.

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