Dow futures rallied as investors focused on the economy reopening despite civil unres…
U.S. stock futures were higher in early trading on Tuesday as investors grappled with civil unrest around the country as states try to reopen the economy from the coronavirus pandemic.
In a last-minute address from the White House Monday evening, President Donald Trump said he will deploy the military if states and cities failed to quell the demonstrations. Futures initially fell as Trump spoke.
“I am mobilizing all federal and local resources, civilian and military, to protect the rights of law-abiding Americans,” Trump said. “If a city or state refuses to take the actions necessary to defend the life and property of their residents, then I will deploy the United States military and quickly solve the problem for them.”
The stock market has largely ignored the unrest until now, but that could change if investors believe the protests would continue through the summer, disrupting states plans to reopen and hurting consumer confidence.
“Good news on vaccines helped stocks in May, but US-China relations & civil unrest could steal the spotlight in June,” Lori Calvasina, RBC’s chief U.S. equity strategist, said in a note. “The S&P 500 remains highly news flow driven.”
New York Gov. Andrew Cuomo announced New York City will be under curfew Monday night starting at 11 p.m. and lasting until 5 a.m. Tuesday to curb protests. Similar curfews were instituted in cities across the country in an effort to dissolve mass gatherings.
The market rose slightly on the first day of June following back-to-back monthly gains. The Dow rose about 90 points on Monday after a 4.2% gain in May and a 11% rally in April. Meanwhile, the S&P 500 climbed about 0.3% after gaining 4.5% in May and 12.6% the month before.
Investors continued to focus on the progress of economic reopenings, bidding up shares of airlines, retailers and cruise line operators. However, many on Wall Street grew worried that rising risks of the racial strife and U.S.-China tensions could reverse the market’s massive comeback.
Tensions with China continued to simmer as the country asked state-owned firms to halt purchases of soybeans and pork from the U.S., Reuters reported Monday. The move came after Trump said he would take steps to revoke Hong Kong’s favored trade status, in response to a controversial new security law passed by China’s parliament.
“The disconnect between stocks and the economy generated widespread concern among some investors,” Jeff Buchbinder, equity strategist for LPL Financial, said in a note. “At the same time, reopening optimism and massive stimulus overshadowed some concerns about a second wave of COVID-19 infections and increasing US-China tensions.”
As of Monday, the S&P 500 has bounced about 39% off its March low, sitting about 10% below its record high set in February.
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www.cnbc.com 2020-06-02 09:45:43