KEY POINTS

  • A renewal of Monday's rally will have to wait as stock futures portend another selloff
  • Investors disregarded the upbeat boost in manufacturing from China
  • Even news of new vaccines and tests for COVID-19 failed to ignite enthusiasm

Another back-to-back Wall Street rally -- the second in as many weeks -- that seemed to be in the cards at the start of Tuesday trading fizzled later on Monday as stock futures for all three indices took a dive.

Dow Jones Indusrial Average futures lost 60 points, or 0.3%, after climbing much as 0.8% in earlier trading. S&P 500 and NASDAQ Composite futures lost 0.2% each. The extreme volatility still pummeling stocks was evident in the wild swing among futures.

The retreat by futures occurred despite a stunning and large jump in China's official manufacturing index revealed Monday morning. China's official manufacturing Purchasing Managers' Index (PMI) soared to 52 in March, from a record low of 35.7 in February, suggesting a rebound in economic activity. It beat a forecast of 45 by analysts polled by Reuters.

The official non-manufacturing PMI jumped to 52.3 in March from February's 29.6. A reading above 50-points indicates growth compared to the previous month. A lower reading indicates a contraction.

"A full recovery (in China) will take much longer given the deepening slump in foreign demand and the deterioration in the labor market," said Julian Evans-Pritchard, senior China economist from Capital Economics, in a report on Tuesday.

Some analysts weren't surprised by the PMI reading surge. They point out it jumped as high as it did since China's economy ground to a virtual halt in February. This made it possible for any bounce to have strong legs.

A repeat of Monday's rally would have been another welcome respite for harried investors. On Monday, the Dow rose 690.7 points, or 3.19%, to 22,327.48. The S&P 500 advanced 85.18 points, or 3.35%, to 2,626.65 while the NASDAQ improved 271.77 points, or 3.62%, to 7,774.15.

The three major indices rose in part due to healthcare stocks as investors hunted down suddenly cheap shares. The biggest gainer at the Dow was Johnson & Johnson, which jumped 8% after announcing its plans to have an experimental COVID-19 vaccine ready for human testing by September. The federal government also plans to help fund the development of enough manufacturing capacity for J&J's upcoming COVID-19 vaccine.

The S&P healthcare sector soared 4.67%, also due to the same news from J&J and from Abbot Laboratories, which improved 6.41% after receiving U.S. government approval for a COVID-19 diagnostic test.

The S&P tech sector also profited, rising more than 4% on the day.  Microsoft Corporation shares jumped more than 7%, the biggest boost to the benchmark.

New York, home to the United Nations, has become the epicenter of the COVID-19 coronavirus in the United States New York, home to the United Nations, has become the epicenter of the COVID-19 coronavirus in the United States Photo: AFP / Johannes EISELE