US Stock Market Futures: Dow, S&P 500, Nasdaq Point To Monday Opening Hike

KEY POINTS

Now more volatile than ever, Wall Street futures seem to imply a rally at Monday's opening
Futures were predicting a selloff a few hours before, however
Equity markets remain overextended and there's still no bottom

On Sunday, there was no sign the U.S. Cavalry was coming to rescue Wall Street from another bloodbath on Monday. Futures that day portended a continuation of the selloff that marked last Friday's trading, and ended a historic three day-long rally.

On Monday, however, the Cavalry arrived and nobody's sure what it was. The likeliest guess is the Monday spike in futures was just another peak after the trough on Sunday. On Sunday, futures suggested an implied opening drop of more than 300 points for the Dow Jones Industrial Average.

Early Monday morning, however, Dow futures went into reverse and clawed upwards by 132 points, pointing to an implied rise of about 59 points at the Monday open. S&P 500 futures and NASDAQ 100 futures also indicated a slightly higher opening on Monday. Futures might swing lower before trading opens, however.

“Equity markets are overextended, but face a bumpy period of even grimmer virus news and poor economic statistics in the next 1-2 months,” wrote MRB Partners in a note to investors. “The world is now entering a third phase, the first being the shock of an out-of-control virus spreading around the globe, then the massive policy response, and now the economic fallout phase has arrived and will test investors’ very fragile confidence.”

Investors now seem eager to put Friday's selloff behind them.

All three indices lost big in a huge selloff Friday as news the U.S. hit 100,000 confirmed COVID-19 cases overcame any enthusiasm ignited by president Donald Trump signing the $2 trillion coronavirus economic stimulus bill on the same day.

Friday’s rout ended a three-day Wall Street winning streak. The uptick saw the Dow yield 915.39 points, or 4.1%, to 21,636.78. The benchmark S&P 500 lost 3.4% to 2,541.47 while the tech-heavy NASDAQ ended 3.7% lower at 7,502.38.

The energy sector plunged 6.9% while tech fell 4.6% to become the worst-performing sectors in the S&P 500. Energy took a huge hit from a 4.8% drop in crude prices.

Despite the Friday selloff, all three indices could smile at a week of strong gains. The Dow jumped 12.8% week-to-date, its largest one-week jump since 1938. The S&P 500 rose 10.3% for its best weekly performance since March 2009. The NASDAQ jumped 9.1% for its biggest weekly gain in 11 years.