Before The Bell
Wall Street opened for trading yesterday morning following the long Memorial Day Weekend and immediately started buying, as investors sought to extend their winning streak from last week. Optimism about the fairly rapid pace in which the 50 states are reopening and apparent progress in finding an effective vaccine for the COVID-19 pandemic were behind the early euphoria, which saw the Dow Jones Industrial Average surge forward by better than 600 points, to climb back above 25,000.
And for a change, the Dow was in the lead among the major averages. In fact, as we passed the noon hour in New York, we saw that composite was still ahead by almost 600 points, rising better than 2.3%. The S&P 500 was ahead by 1.6%, and the NASDAQ by just 0.8%. In recent weeks, it had been the latter, which had consistently led the way. But yesterday in the early going, there was some relative weakness in some high-profile technology names that capped the gains in the NASDAQ.
In the news background, stocks jumped up not only on the widespread reopening efforts, but also on word that yet another pharmaceutical house was edging closer to a vaccine for COVID-19. Also, a noted stock market forecaster suggested that a new high for the stock market this year was a real possibility. All the while, the upturn sent the S&P 500 Index back above 3,000, as investors embraced moves by economies worldwide to ease coronavirus lockdowns. This was the S&P's first excursion above that psychological milestone since the late-winter downturn commenced.
This further euphoria, notwithstanding, worries remain over a possible resurgence of infections as businesses reopen, Americans leave their residences more frequently, and many opt to leave their masks at home, as well. Then, there are the escalating trade tensions between the United States and China. That could be a real problem going forward. More encouraging was the fact that the Conference Board's monthly gauge of consumer confidence, which had been in a freefall in March and April, nudged up slightly in May, rising from 85.7 to 86.6.
Armed with this generally supportive backdrop, the market continued to press higher through much of the afternoon, with the Dow's advance cresting at almost 700 points as we entered the final two hours of the trading day. However, as the afternoon wound down, the stock market could not hold all of its gains, as some profit taking ensued. To be sure, the day did end with a sizable advance, but the 530 and 36 points, respectively, that the Dow and S&P 500 rose, left the indexes below 25,000 on the former and 3,000 on the latter. The NASDAQ, meantime, just eked out a 15-point increase.
As to the late selloff, shares of Moderna (MRNA) and Novavax (NVAX) which earlier had risen on upbeat vaccine news, fell back in late dealings after the CEO of Merck (MRK) said that a COVID-19 vaccine could take 18 months to bring about--not the much narrower time frame the stock market has been counting on. That suggestion added to the late selloff. As to the market going forward, the futures opened slightly higher in the early evening yesterday. Right now, the early indicators this morning point to a strongly higher opening.
— Harvey S. Katz, CFA
At the time of this article, the author did not have positions in any of the companies mentioned.
