U.S. Stock Futures Rally at Start to the Week - The Wall Street Journal

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Updated June 22, 2020 8:33 am ET

U.S. stock futures ticked up Monday, signaling a cautiously upbeat start to the week as investors cheered signs of a nascent economic recovery despite a rise in coronavirus-infection rates in some states.

Futures tied to the Dow Jones Industrial Average gained 0.8%, suggesting the blue-chips index will edge higher after the New York opening bell. The Dow ended up 1% last week, marking its fourth week of gains since mid May.

A widespread rally among U.S. stocks, extending beyond the large-cap technology companies that initially sparked a bounce back, has helped the major equity benchmarks erase most of their losses for this year. Technical measures are now suggesting that stocks have more scope to climb in the months ahead. That comes even as data shows that infections have picked up pace in Arizona, South Carolina, Florida and Texas.

“The market rally we’ve seen in recent months is firming up,” said Seema Shah, chief strategist at Principal Global Investors. “We may not see sharp moves higher, but the economic data is starting to catch up with market performance.”

Jobless claims figures have eased in recent weeks, suggesting that the American labor market may be recovering faster than economists had expected, though unemployment remains at historic levels. Investors meanwhile are also looking to a mix of conventional and unconventional indicators of economic activity such as restaurant reservations, hotel occupancy rates, retail-store traffic and airline travel figures to gauge consumers’ appetite for spending as lockdown measures ease.

“The data is suggesting that households are starting to feel confident again about going about their business,” Ms. Shah said. “As long as the rise in the coronavirus cases doesn’t put them off, then the economic recovery in the second half of the year may be stronger than anticipated.”

The Trump administration is preparing for a fresh wave of cases, according to White House trade adviser Peter Navarro. A second wave of infections isn’t necessarily expected, but the government is stockpiling drugs and equipment in case infections resurge in the fall, Mr. Navarro said Sunday.

Ahead of the opening bell in New York, American Airlines fell almost 9%. The U.S. carrier said Sunday that it plans to raise $3.5 billion from debt and equity to boost its liquidity and help maintain operations through the pandemic. Rivals United Airlines Holdings and Delta Air Lines also dropped.

In bond markets, the yield on the 10-year U.S. Treasury ticked down to 0.689%, from 0.696% Friday.

U.S. existing-home sales are expected to have fallen again in May.
Photo: frederic j. brown/Agence France-Presse/Getty Images

Figures on U.S. existing-home sales, due to be released at 10 a.m. ET, are expected to show a fall in May for the third straight month as lockdowns and layoffs took a toll on the economy.

In Europe, oil-and-gas companies and travel and leisure stocks were among the worst performers. That left the pan-continental Stoxx Europe 600 wavering between gains and losses before it edged down 0.6%.

“The momentum is running out for the liquidity-induced rally that we’ve seen in the past few weeks. It needs fuel from central banks and I don’t think we’ll see that soon,” said Steen Jakobsen, chief economist and investment officer at Saxo Bank. “The market expects a U-based recovery, but that doesn’t allow for the drop in activity that will eventually come when furlough and other support schemes run out at the end of July and August.”

Payments company Wirecard plunged 38%, making it the worst performer among major European stocks. The troubled German business said early Monday that the $2 billion that banks were supposedly holding on its behalf probably doesn’t exist.

Deutsche Lufthansa and British Airways’s parent, International Consolidated Airlines Group, were also among the biggest losers in the region Monday. Lufthansa faces opposition from a major shareholder for its planned bailout agreement with the German government, according to Adrian Yanoshik, senior analyst at Berenberg Bank. The German airline fell 2.9%.

Speculation that IAG may seek to raise additional capital is driving its stock lower, Mr. Yanoshik said. The airline sector in Europe was also facing pressure following reports of an uptick in the infection rate for coronavirus in Germany, he added. IAG dropped 4.8% in London.

In Asia, most major equity benchmarks dropped by the close of trading. Hong Kong’s Hang Seng Index was among the biggest losers, down 0.5%. India’s S&P BSE Sensex, meanwhile, gained 0.5%.