U.S. stock benchmarks on Tuesday were poised to extend gains in the second trading day in February with investors encouraged by news on the pace of vaccines in the U.S., the prospect of more fiscal aid from Congress, and a decline in the frenzy of retail trading in heavily shorted stocks.
A slate of earnings reports are also in focus Tuesday, including Pfizer
before the bell and mega-capitalization stocks Amazon
and Google parent Alphabet
slated to report after the close.
How are stock benchmarks performing?
Futures for the Dow Jones Industrial Average
rose 241 points to reach 30,351, a gain of 0.8%.
S&P 500 index futures
advanced 32.05, or 0.9%, to 3,798.
climbed 110.75 to reach 13,347.25.
On Monday, stocks finished sharply higher. The Dow
closed up 229.29 points, or 0.8%, to close at 30,211.91, the S&P 500
added 59.62 points, or 1.6%, to settle at 3,773.86, while the Nasdaq Composite Index
finished 332.70 points, or 2.6%, touching 13,403.39.
What’s driving the market?
After dizzying moves in popular, but relatively small, companies GameStop Corp.
and AMC Entertainment
investors may be training their attention on corporate quarterly results in the second-most active week of the fourth-quarter earnings season.
Thus far the numbers have been promising, even amid the coronavirus pandemic, with 81% of the 189 S&P 500 companies that have reported, exceeding consensus expectation, FactSet data show.
”It is a big day for earnings with the latest Q4 numbers from Alphabet and Amazon after the close,” wrote Michael Hewson, chief market analyst at CMC Markets.
”US markets look set to continue where they left off last night with a positive start as investors continue to look past the recent GameStop driven volatility,” the analyst said.
Discussions around another round of coronavirus relief from Congress also was drawing attention on Wall Street, after a group of Senate Republicans outlined on Monday a roughly $618 billion offer, including a round of $1,000 direct checks for many adults. House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer introduced a budget resolution yesterday, the first step in a process called budget reconciliation which would allow much of President Joe Biden’s $1.9 trillion stimulus plan to pass the Senate with just a simple majority.
Meanwhile, U.S. COVID cases have been trending lower also providing some optimism for Wall Street bulls.
Hospitalizations have also been falling, according to the COVID Tracking Project. There were 93,536 COVID-19 patients in U.S. hospitals on Monday, down from 95,013 a day earlier and the lowest level since Nov. 29. The CDC’s vaccine tracker is showing that as of 6 a.m. Eastern Monday, 32.2 million doses had been administered so far, which is more than the confirmed case tally. So far, 49.9 million doses have been delivered to states.
”Perhaps the most under-stated recovery has been in the number of daily Covid-19 cases and the hospitalization rate which had been improving well before the vaccine distribution began,” wrote analysts at Jefferies, led by Sean Darby, global equity strategist.
Late last week, investors fretted about wild upside moves in shares of GameStop
and AMC Entertainment
among other small, heavily shorted companies whose moves have been attributed to organized efforts by individual investors to drive share prices higher and hurt short selling hedge funds. Shares of GameStop and other stocks boosted by retail interest fell sharply in premarket trade on Tuesday.
Some market participants have feared that the unusual trading moves were indicative of a market that wasn’t healthy, while other strategists view the events as idiosyncratic and unlikely to disrupt broader market moves.
Which stocks are in focus?
Shares of Pfizer Inc.
slipped 0.6% in premarket trading Tuesday, after the drugmaker reported fourth-quarter profit that missed expectations, but revenue that beat forecasts and provided an upbeat full-year outlook.
- ConocoPhillips COP said Tuesday it had a net loss of $800 million, or 72 cents a share, in the fourth quarter, after earnings of $700 million, or 65 cents a share, in the year-earlier period.
- GameStop shares dropped 33%, after closing Monday down 31%. Its stock is still up a remarkable 1,204% over the last month.
- AMC Entertainment the movie chain operator that is also popular on the Reddit Wall Street Bets forum, dropped 25% in premarket trade.
Shares of Alibaba
rose after its Q3 results.
- Shares of McKesson Corp. MCK rose 0.7% in premarket trading Tuesday, after the health-care supply and retail pharmacy company reported a fiscal third-quarter loss of more than $6 billion as a result of an opioid litigation charge, but adjusted profit and revenue that rose above expectations.