Futures point to a higher start for U.S. stocks Monday as investors tracked President Donald Trump’s response treatment for COVID-19 after he was hospitalized by the disease on Friday, and weighed prospects for another round of stimulus from Washington.
Futures on the Dow Jones Industrial Average YM00, +0.71% rose 222 points, or 0.8%, to 27,787, while S&P 500 futures ES00, +0.66% were up 26.55 points, or 0.8%, at 3,365.75. Nasdaq-100 futures NQ00, +0.84% gained 126 points, or 1.1%, to trade at 11,359.25.
The Dow DJIA, -0.48% on Friday fell 134.09 points, or 0.5%, to 27,682.81, as benchmarks ended well off session lows scored after the initial news of Trump’s diagnosis. The S&P 500 SPX, -0.95% on Friday ended 32.36 points lower, down 1% at 3,348.44, while the Nasdaq Composite COMP, -2.22% finished 251.49 points lower, down 2.2%, at 11,075.02.
What’s driving the market?
Analysts said the primary concern for investors revolves around whether Trump’s illness will affect a presidential race in which he continues to lag behind Democratic challenger Joe Biden. On a related note, investors are also weighing prospects for agreement on a stimulus package.
Coronavirus update: Expert calls for ‘radical transparency’ on Trump’s coronavirus treatment and progress as more in president’s circle test positive
Investors and analysts were already bracing for a volatile run-up to the Nov. 3 presidential election before Trump’s diagnosis. The weekend saw conflicting reports over the timeline of Trump’s treatment and his condition.
On Sunday, Trump’s doctors said his condition was improving and that the president could be discharged from Walter Reed National Military Medical Center as early as Monday.
Read: Here’s what President Trump’s coronavirus diagnosis means for stock-market volatility
“In the near term…the dramatic turn of events may be a catalyst for a stimulus agreement — or it may not; we wait for bills to be put to Congress and votes to be taken,” said Julian Emanuel, chief equity and derivatives strategist at BTIG, in a note. “ With key economic data extending its run of disappointments versus expectations and high-profile corporate layoffs, additional aid would seem imperative. ”
Results of a Wall Street Journal/NBC News poll conducted in the two days following Tuesday’s highly contentious presidential debate but before news of Trump’s COVID-19 diagnosis showed Biden expanding his lead to 14 percentage points, a 53% to 39% advantage, among registered voters. The survey showed Biden with an 8-point lead last month and an 11-point advantage in July, previously his largest lead of the campaign.
Analysts said prospects for a more decisive outcome on Nov. 3 could be a positive for markets. Fears have grown of an inconclusive election result that could see weeks of contentious political and legal wrangling. A growing lead for Biden could also make the White House and congressional Republicans may more willing to give in to Democratic demands in drawn-out negotiations for a new round of stimulus. Trump on Saturday tweeted in favor of another round of stimulus:
“The bottom line is that this market is now a hostage to incoming political headlines. While the tea leaves currently point to a deal being more likely than not, that could change in an instant and the time window for reaching an agreement is closing fast,” said Marios Hadjikyriacos, investment analyst at XM, in a note.
“The next ‘big move’ in stocks and the dollar will depend on whether the week ends with a deal or not,” he said.
Which companies are in focus?
- Shares of Tesla Inc. TSLA, -7.37% were up 2.5% in premarket trade after the electric car maker reported quarterly sales Friday that topped Wall Street forecasts and hit a record.
- MyoKardia Inc. MYOK, -0.36% shares jumped nearly 60% in premarket trade after the biotechnology company confirmed that it agreed to be bought out by Bristol-Myers Squibb Co. BMY, -1.83% in a deal valued at $13.1 billion in cash. Bristol Myers shares were off more than 1% ahead of the bell.
Originally published on MarketWatch