Futures contracts tied to the major U.S. stock indexes fell early Thursday as investors took a breather from Wall Street’s robust gains so far this week.
The overnight moves came on the back of sharp rallies in the major stock indexes so far this week.
The Nasdaq Composite and S&P 500 both extended week-to-date gains during Wednesday’s regular trading session and finished the day up 2% and 1.6% respectively. The broad S&P 500 closed at its highest level since March 6 on Wednesday afternoon.
The Dow industrials, meanwhile, finished Wednesday’s trading up 369 points, or 1.5%, as Apple, Disney and McDonald’s all added at least 30 points to the blue-chip index amid a surge in reopening optimism.
The S&P 500, Nasdaq Composite and Dow are up 3.7%, 4% and 3.7% since Monday. The S&P 500 and Dow are both on track for their best weeks since the week ended April 8.
Popular consumer internet names including Facebook and Amazon both clinched new all-time highs on Wednesday as investors cheered the former’s new e-commerce venture and the latter’s continued success in delivering goods to Americans during the Covid-19 outbreak.
But investors say the broader strength this week is in large part thanks to state efforts to ease stay-at-home orders and begin lifting restrictions on business.
Connecticut, for example, began on Wednesday to allow residents to dine in at restaurants with outdoor seating. That partial reopening came a day after New York Gov. Andrew Cuomo said that the pandemic is back down to where it started in the Empire State.
Hopes surrounding a potential Covid-19 vaccine, including a report from Moderna, helped lift stocks to their best day in over a month on Monday.
“The broad market has taken some support from positive treatment and vaccine headlines as a complement to a generally more optimistic economic reopening,” LPL Research wrote Wednesday. “The incredible rally off the March 23 lows continues for equities, with the S&P 500 Index now up more than 32% in 40 trading days.”
LPL Market Strategist Ryan Detrick did caution, however, that such a comeback is usually accompanied by occasional pullbacks — sometimes as steep as 10% — as investors try to correct sentiment and prices to an appropriate level given bear-market headwinds.
Thursday’s forthcoming update to the U.S. unemployment claims threatened to keep the week’s optimism in check.
The Department of Labor is scheduled to release the latest update to initial jobless claims at 8:30 a.m. ET Thursday morning. Though economists polled by Dow Jones expect the government to announce yet another deceleration in the pace of claims, the consensus estimate predicts another 2.4 million Americans filed for insurance during the week ended May 16.
Last week, the Labor Department reported another 2.9 million Americans had filed claims in the week ended May 9, which brought the coronavirus crisis total to nearly 36.5 million, by far the largest loss in U.S. history.