Stocks are set to jump, with Dow futures pointing to a more than 700 point opening gain
A person wearing a face mask walks along Wall Street after further cases of coronavirus were confirmed in New York City, New York, U.S., March 6, 2020.
Andrew Kelly | Reuters
U.S. stock futures rose on Sunday night as Wall Street tried to recover from another decline last week while investors shook off rising tensions between Saudi Arabia and Russia.
Dow Jones Industrial Average futures traded 696 points higher, implying a gain of about 730 points at the Monday open. S&P 500 and Nasdaq 100 futures also pointed to robust Monday opening gains for the two indexes.
Last week, the major averages posted their third weekly decline in four. The Dow slid 2.7% while the S&P 500 lost 2.1%. The Nasdaq Composite closed last week down 1.7%. Stocks are also deep in bear-market territory as concerns over the coronavirus outbreak have virtually shut down the global economy and have dampened sentiment around corporate profits.
However, some on Wall Street think the market could start to turn a corner soon.
Billionaire investor Bill Ackman, founder of Pershing Square Capital Management, said in a series of tweets he is “beginning to get optimistic.” He said cases in New York, a hot spot for the coronavirus in the U.S., “appear to be peaking” while some treatments “appear to help.”
“If this is true, the severity and death rate could be much lower than anticipated, and we could be closer to herd immunity than projected,” Ackman also said. “While it is hard to be positive when we know that tens of thousands more will die and many more will get severely sick, I have no choice but to be more optimistic about the intermediate future based on the data and facts I have seen recently.”
The number of coronavirus-related hospitalizations has fallen slightly in New York while discharges are up, Gov. Andrew Cuomo said Sunday. Italy also reported Sunday its smallest daily increase in deaths in two weeks.
To be sure, the number of coronavirus cases continues to increase sharply. More than 1.2 million coronavirus cases have been confirmed, according to Johns Hopkins University. The U.S. is by far the country with the most cases at over 330,000. On Saturday, Trump warned “there will be a lot of death,” noting the U.S. faces its “toughest week” in its fight against the virus.
Marc Chaikin, CEO of Chaikin Analytics, advises investors to remain cautious.
“Until the spread of the COVID-19 virus peaks and we are closer to a reopening of the U.S. economy, sell rallies and sit on your cash,” said Chaikin. “If we are fortunate to see an effective treatment there will be plenty of capital gains opportunities. For me, capital preservation is more important than capital gains.”
Stock futures shook off a massive decline in oil prices as a key meeting between major oil producing countries was delayed. U.S. crude fell more than 4% to $27 per barrel.
The meeting between OPEC and Russia was scheduled for Monday, but sources familiar with the matter told CNBC it will “likely” take place Thursday. The delay comes after President Donald Trump told CNBC last week he expected both countries to cut production by up to 15 million barrels.
Trump’s comments helped U.S. crude post its biggest-ever weekly gain. West Texas Intermediate futures rallied 12% last week. WTI also jumped 24% on Thursday for its best day on record, lifting equity prices that day as concern about financial and job losses in the energy sector eased.
Crude has taken a beating this year as Saudi Arabia-led OPEC and Russia failed to reach a deal on production cuts while the global spread of the coronavirus dampens the demand outlook for oil. Year to date, WTI has lost more than half of its value.
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