Stock futures flat after Monday’s rally on hopes for economy reopening

U.S. stock futures opened flat in overnight trading, following a rally in the previous session as plans to ease coronavirus-induced lockdowns fueled investor appetite for riskier assets. 

Dow futures fell 10 points, indicating a loss of 0.17{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} at the open on Tuesday. The S&P 500 and Nasdaq were also set to open lower, with losses of 0.16{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and 0.19{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, respectively.

A partial reopening of the economy — in Alaska, Georgia, South Carolina, Tennessee, Texas and others — is boosting investor sentiment, with certain U.S. businesses poised to benefit from the first wave of consumers emerging from the coronavirus driven quarantine. 

On Monday, the Dow Jones Industrial Average rose more than 350 points, closing above 24,000 for the first time since April 17. The S&P 500 and Nasdaq Composite always registered a gain, advancing 1.5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and 1.1{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, respectively. Monday’s gains put the S&P 500 on pace for its biggest one-month gain since 1987 with an 11.4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} surge in April. 

“The stock market is increasingly reflecting a restart in the economy as more and more states show a willingness to allow some economic activities to come back online.  Not only did the S&P 500 index post a healthy gain today but it was led by those segments of the marketplace which are most dependent on an economic restart including small caps, high beta stocks, and cyclical sectors like financials, materials and industrials,” Jim Paulsen, chief investment strategist at The Leuthold Group told CNBC. 

Stocks that would benefit the most from a reopening led the market higher on Monday. Retailers, one of the hardest hit industries by the coronavirus, helped than broader market with Kohl’s, PVH, Nordstrom, Gap and L Brands all surging more than 11{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. Casino stocks and cruise lines also saw large gains. Disney was the biggest winner in the Dow, rising 4.8{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. 

Bank stocks also got a boost from rising bond yields, as investors fled safer assets and moved into equities. JPMorgan rose 4.3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, Citigroup surged 8{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and Wells Fargo gained 5.5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. Bank f America and Goldman Sachs rose 5.8{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and 3.7{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, respectively. 

Stocks shrugged off a 25{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} drop in oil prices on Monday, extending recent losses that’s seen eight negative weeks in nine, on ongoing fears that worldwide storage will soon be full.

While many investors are bullish on the first wave of reopenings, DoubleLine CEO Jeffrey Gundlach said Monday the market could retest its March low as market participants could be underestimating the social disruptions from the coronavirus.

“I think a retest of the low is very plausible,” Gundlach said on CNBC’s “Halftime Report.” “People don’t understand the magnitude of … the social unease at least that’s going to happen when … 26 million plus people have lost their job,” the so-call bond king added. 

Investors are also digesting the busiest week of earnings season, with 145 S&P 500 companies reporting between Monday and Friday. A quarter of the way through earnings season companies have proved the coronavirus is weighing heavy on corporate profits.

Alphabet, Ford and Starbucks all release quarterly earnings on Tuesday. PepsiCo, 3M, Caterpillar, Southwest Air, Merck & Co., Pfizer, UPS and Advanced Micro Devices are also slated to report. 

Consumer confidence will be released at 10 am E.T. on Tuesday. Economist polled by Dow Jones are expecting a read of 92 in April, down from March’s read of 120. 

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