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Dow futures edge up as stock market aims for best August return in 36 years

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U.S. stock-index futures on Monday were inching higher as Wall Street attempts to close out a strong performance in a seasonally lackluster month, ahead of what’s likely to be a turbulent patch for investors heading into autumn amid the COVID-19 pandemic and ahead of crucial 2020 elections.

How are stock benchmarks performing?

Futures for the Dow Jones Industrial Average
YMU20,
+0.10%
YM00,
+0.10%
rose 45 points, or 0.2%, at 28,656, those for the S&P 500
ESU20,
+0.20%
ES00,
+0.20%
advanced 8.10 points, or 0.2%, at 3,512,50, while Nasdaq-100 futures
NQU20,
+0.28%
NQ00,
+0.28%
picked up 52.50 points, or 0.4% at 12,044.25.

On Friday, the Dow
DJIA,
+0.56%
noted a weekly gain of 2.6%, the S&P 500
SPX,
+0.67%
added 3.3%, and the Nasdaq Composite Index
COMP,
+0.60%
was up 3.4%. All three indexes have gained at least 7% so far in August, continuing a trend of August being the best month for stocks in an election year.

What’s driving the market?

The S&P 500 and the Nasdaq are aiming for the best August return since 1984, with much of the gains coming amid growing hope for vaccines and treatments for the COVID-19 pandemic that has debilitated economies across the globe.

Adding to the optimism around potential coronavirus cures, the Food and Drug Administration’s commissioner, Stephen Hahn, said that the U.S. could fast-track a trio of vaccines. The FDA boss, in an interview with the Financial Times over the weekend, insisted that there is a safe way to make a vaccine available before the end of final stage trials—potentially by issuing an emergency authorization for use by certain groups rather than a blanket approval.

Still, the final trading day in August comes ahead of a seasonally weak month for stocks in September, which may be amplified by worries about a resurgence of COVID-19 in the fall and winter and turbulence fostered the U.S. presidential election race between former Vice President Joe Biden and incumbent President Donald Trump.

Mark Hulbert: The stock market is on a tear, but now comes September, the worst month of the year

Trading in financial markets on Monday, following an important declaration by the Federal Reserve last week that it would use an average inflation target as a part of its monetary-policy, which implies that the central bank would pursue lower rates for a longer period even if the unemployment rate, which is historically associated with rising price pressures, started to fall substantially.

Read: Fed adopts new strategy to allow higher inflation and welcome strong labor markets

“Jerome Powell’s soothing tones are continuing to provide that calming reassurance for investors, even as we head into what could be a rollercoaster ride in the final months of the year,” wrote Craig Erlam, senior market analyst at Oanda in a research note.

“A vaccine is on the way and perhaps Biden wouldn’t be such a bad thing for the markets after all…I mean, none of these things are guaranteed by any stretch of the imagination and the most important of them is far from it,” he added.

Meanwhile, China on Friday unveiled new restrictions on artificial-intelligence technology exports that could further complicate the sale of TikTok’s U.S. operations as the Trump administration tries to quickly find a buyer. Microsoft Corp.
MSFT,
+1.02%,
Walmart
WMT,
+2.68%
and Oracle Corp.
ORCL,
+1.22%
have all been reportedly interested in acquiring pieces of the popular social-media company.

The latest development with the ByteDance-owned TikTok highlights growing worries about a sudden flare-up of animosities between Beijing and Washington.

Monday also marks key changes to the Dow precipitated partly by Apple Inc.’s
AAPL,
-0.64%
4-for-1 stock split, which prompted the Dow’s owners, S&P Dow Jones Indices, to add Salesforce.com Inc.
CRM,
-1.88%,
Amgen Inc.
AMGN,
+0.12%
and Honeywell International Inc.
HON,
+1.44%
to the index, replacing iconic Exxon Mobil Corp.
XOM,
+2.39%,
Pfizer Inc
PFE,
+0.13%,
and Raytheon Technologies Corp.
RTX,
+2.20%.

Read:Of all the major changes to the Dow on Monday, this may be the most important

Separately, investors may take cues from recent revealed purchases by luminary investor Warren Buffett, whose Berkshire Hathaway conglomerate
BRK.B,
+0.77%
disclosed stakes in Japanese investment firms Mitsubishi Corp.
8058,
+7.71%,
Mitsui & Co.
8031,
+7.34%,
Sumitomo Corp.
8053,
+9.08%,
Itochu Corp.
8001,
+4.18%
and Marubeni Corp.
8002,
+9.48%
just before the Tokyo stock market opened Monday.

Which stocks are in focus?
  • Shares of Tesla Inc.
    AAPL,
    -0.64%
    surged in premarket trading Monday, as the electric car maker’s 5-for-1 stock split was set to take effect after the opening bell, but has pared earlier gains.

  • Shares of Apple rallied 1.4% in premarket trading Monday, paring earlier gains, as the 4-for-1 stock split is set to become official after the opening bell. Given Friday’s close was $499.23, the split-adjusted close is now $124.81.



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