U.S. stocks were seen rising on Tuesday as Wall Street returned from a three-day holiday weekend to start a new month on a positive note with the economy reopening as coronavirus cases decline to the lowest in over a year though inflation is rising.
How are stock benchmarks performing?
- Futures for the Dow Jones Industrial Average YM00, +0.76% YMM21, +0.76% climbed 181 points to reach 34,694, a gain of 0.5%.
- S&P 500 index futures rose 19.10 points, or 0.5%, to 4,221.50.
- Nasdaq-100 futures advanced 57 points at 13,743.50, a rise of 0.4%.
On Friday, the Dow DJIA, +0.19% booked a weekly gain of 0.9% for a rise of 1.9% in May, marking its fourth monthly gain in a row; the S&P 500 SPX, +0.08% rose 1.2% on the week for a May gain of 0.6%, also marking its fourth straight monthly advance; and Nasdaq Composite Index COMP, +0.09% had a weekly gain of 2.1%, but a 1.5% decline in the month to date.
What’s driving the market?
U.S. stocks in June looked ready to trend higher as global markets in Asia reached their highest levels in a month and as those in Europe were near record highs.
Getting things of to a strong start globally was a report showing China’s private manufacturing gauge, the Caixin/Markit Manufacturing Purchasing Managers’ Index, rising to 52, up from 51.9 in the prior month and marking the highest level since December. A reading of at least 50 indicates improving conditions.
Those for the U.K., the IHS Markit/CIPS UK Manufacturing PMIs, rose to 65.6 in May from 60.9 in April, representing the highest reading since 1992.
Meanwhile, the eurozone jobless rate fell in April, even as COVID-19 restrictions continued leading many businesses to reduce or suspend services.
The U.S. is looking ahead to its own reports on the manufacturing sector, the IHS Markit survey at 9.45 a.m and the Institute for Supply Management’s survey of purchasing managers, due at 10 a. m. Eastern, which are expected to show activity expanded at a solid clip in May.
Higher post-COVID demand and material shortages and bottlenecks have combined to pressure prices on goods and services. The data on factory activity will offer another read of the state of the economy in the recovery phase from the pandemic.
May’s mostly muted equity moves suggest that investors are coming around to the notion that inflation will be transitory and that the Federal Reserve will patient in retracting stimulus measures that have been put in place to help support the economy amid coronavirus.
Doubts about how inflation genuinely plays, however, have been a key source of market turbulence.
“Despite all inflation concerns, investors are still happy to support riskier assets, but this view isn’t shared by most of them as they continue to wait for another major catalyst that is likely to set the tone for markets,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a aily research note.
“This was one of the major reasons that we have not seen any decent trading volume during the last month,” the analyst wrote.
Meanwhile, Covid cases continue to decline in the U.S. as vaccination rates rise. More than 62% of adults have received at least one vaccine dose, the CDC reported Sunday. said. There were just 12,663 new cases on Saturday, according to the CDC, the lowest since March 2020.
Market participants will likely see at least two speakers from the Fed on Tuesday, ahead of the central bank’s media blackout period before a two-day policy meeting June 15-16.
Fed’s Vice Chair for Supervision Randal Quarles will be interviewed by Politico at 10 a.m. and Fed Gov. Lael Brainard will delivered a speech to Economic Club of New York at 2 p.m. Eastern.
Which companies are in focus?
- Shares of Cloudera Inc. CLDR, soared in premarket trading Tuesday, after the data management and analytics software company disclosed a deal to be acquired for $16 a share in cash by funds advised by Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts & Co. L.P. KKR, -0.02%
- LifeStance Health Group Inc. LFST, disclosed Tuesday that it has set terms of its initial public offering, in which the Arizona-based outpatient mental health company looks to raise up to $557.6 million and be valued at up to $6.35 billion.
- AMC Entertainment Holdings Inc. AMC disclosed Tuesday that it sold 8.5 million shares of its common stock for $230.5 million to Mudrick Capital Management L.P. The share sale deal would represent a price of for AMC’s stock of $27.12 a share, which is 3.8% above Friday’s closing price of $26.12.
- Chinese electric vehicle maker NIO NIO said May deliveries rose 95% year-over-year to 6,711 vehicles.