U.S. stock futures rose Monday, suggesting the major benchmarks will rebound from their worst week since October. The price of money has exploded.
Futures contracts related to the S&P 500 rose 0.9%. Contracts referencing the Nasdaq-100, a heavy technology index, rose 1%, while contracts referencing the Dow Jones Industrial Average index rose 0.7%.
The Cboe Volatility Index, a measure of stress in the U.S. stock market, fell nearly 5% Monday after rising 45% in January. Some investors are expecting a drop in volatility this week, as many hedge funds have already unwound short positions in stocks that have attracted a lot of attention online.
In pre-trade, some of the most actively traded stocks by retail investors extended recent gains.
AMC Entertainment Holdings
rose 22% on Monday before the market opened, while headphone maker Koss gained 7% and
increased by 4.6%.
Financial markets have always been about enabling investors to get rich quick, so there may still be occasional incidents where the performance of certain assets fluctuates, he said.
Director of Investments at BlueBay Asset Management.
Stock markets in general should continue their recovery this year, he added. We think the markets will do very well in the short term because there is hope that the economy is improving and we have a lot of political support, Dowding said.
The recent drop in Covid 19 infection in the US should support market sentiment and allow shares to make up some of Friday’s losses, said Patrick Spencer, managing director of US investment firm Baird. New cases of the coronavirus were reported as early as Sunday afternoon, along with hospitalizations and deaths.
People were very conservatively positioned over the weekend, and news of the coronavirus and continued central bank stimulus will bolster the momentum, Spencer said. They still have a lot of money saved up and want to get back on the market.
The price of money has risen, fueled by a new wave of enthusiasm from online traders. This suggests that the recent wave of volatility will continue into the second week, at least in some sectors of the global financial market.
The most actively traded silver futures rose more than 10% to $29.70 per troy ounce, the highest level since February 2013. The precious metal rebounded in recent sessions after users of the Reddit WallStreetBets forum talked about running a short squeeze similar to recent gains in other stocks like GameStop and AMC. This suggests that individual investors are competing with hedge funds betting on the falling cash price.
I completely underestimated that, says Carsten Fritsch, commodities analyst at Commerzbank. I never thought this could happen in a market as serious and as important as that of money.
In bond markets, yields on 10-year Treasury bonds fell to 1.076% from 1.090% on Friday. The return falls when prices rise.
Investors continue to track corporate earnings season, with 111 companies in the S&P 500 Index making their debut this week. On Tuesday, earnings from major technology companies, including Amazon.com and Alphabet, are expected.
The January manufacturing index from the Institute for Supply Management will be released at 10:00 a.m. ET should show that factory activity in the US continues to increase, albeit perhaps at a slower pace than in previous months.
Outside Germany, the Stoxx Europe 600 rose by 1.3%.
In Asia, benchmark indices closed higher. The Kospi rose 2.7% in South Korea and 2.2% in Hong Kong. China’s Shanghai Composite rose 0.6%.
GameStop and other stocks and assets were volatile as online investors placed large bets on Reddit forums.
Andre M. Chang/Zuma Press
Email Caitlin Ostroff at [email protected]
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