US stock index futures traded higher early Monday after the S&P 500 posted its second consecutive negative week the previous week.
Futures contracts linked to the Dow Jones Industrial Average implied an opening profit of around 151 points. The S&P 500 futures were up 0.5%. The Nasdaq 100 futures rose the most, gaining 0.7%.
Tech stocks rose on the pre-market and shook off another tough period for Bitcoin over the weekend when the cryptocurrency rose again early Monday. The cryptocurrency fell below $ 32,000 on Sunday to bounce back above $ 36,000 on Monday. Bitcoin prices fell to just over $ 30,000 on Wednesday, falling to their lowest level since late January.
Shares in Tesla, a major owner of crypto, rose 0.5% despite Bitcoin volatility in premarket trading. Coinbase gained 2% in premarket trading as Bitcoin stabilized on Monday and Goldman launched the crypto exchange with a buy rating.
Stocks that benefited from the economic reopening also gained in premarket trading. The share of Gap, Carnival and United Airlines was higher.
“We continue to see incremental data points that reinforce our belief that if stocks break out of this area, the next step is to rise significantly,” wrote Tom Lee, head of research at Fundstrat Global Advisors. Lee cited data showing a breakdown in Covid-19 cases.
Stocks have been stalling lately. The previous week the Dow had its fourth negative week in five, but losses were small. The Dow was only down 0.5% for the week while the S&P was only down 0.4%. The Nasdaq Composite was up 0.31% last week and lost for four weeks.
Despite “the collapse of the crypto markets last week and the more Hawkish FOMC protocols, investors bought another stock slump,” JPMorgan wrote in a statement to clients. “This ‘buy the dip’ mentality has been remarkably strong this year and has helped prevent minor corrections in the equity and risk markets from spreading,” the company added.
The Federal Reserve indicated at its April meeting that simple monetary policy could be reconsidered if the economy continues to show signs of rapid improvement, according to the minutes of the meeting released last week.
Looking ahead, there will be a number of retail companies that will post quarterly results in the coming week, including Nordstrom, Urban Outfitters, Gap, and Ulta. Several tech companies will also be releasing quarterly updates, including Nvidia, Snowflake, Workday, and Salesforce. In terms of economic data, consumer confidence and new home sales data will be released on Tuesday.
Heading into the last full week of trading of the month, the Dow is on track to turn a profit for May while the S&P is on track to turn a three-month winning streak. The Nasdaq Composite, which is down more than 3% for the month, is well on its way to achieving its longest monthly profit streak since January 2018, with its first negative month in seven years.
After outperforming year-to-date, small caps have seen some weakness lately and the Russell 2000 is well on its way to a seven-month winning streak.
“We believe the choppy / sideways trend will last a little longer and the market will experience sell-off fears along the way,” noted Adam Crisafulli, founder of Vital Knowledge. “While stocks have so far absorbed many changes well, all turning points have to be played out for longer.”
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– CNBC’s Michael Bloom contributed to the coverage.
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– CNBC’s Michael Bloom contributed to the coverage.
