The major U.S. stock index futures contracts are edging lower early Tuesday after two of the three closed at record highs the previous session. The early price action shows the benchmark S&P futures down 11.25 or -0.31%. The blue chip Dow futures are down 67.00 or -0.22% and the tech-based NASDAQ futures is bucking the early trend with a gain of 35.00 or +0.37%.
In the cash market on Monday, the S&P 500 and Dow posted all-time closing highs. The Dow also hit an intraday record high. The rallies were fueled by the release of trial data from Moderna Inc showing its coronavirus vaccine was more than 94% effective, further raising expectations of a swift economic recovery.
Investors Buying Value, Building on Last Week’s Strong Gains
“Value and smaller companies typically have more leverage to economic recoveries so a vaccine that would remove the weight of COVID-19 off the economy is a distinct positive,” wrote Bill Stone, chief investment officer at Stone Investment Partners.
“Time will tell if this reversal in trends proves durable or starts “makin’ the tears rain down like a monsoon” for value proponents like the many recent false starts.”
Traders Betting on Second Quarter Growth
“Equity markets focused on the improving medium-term growth implications, which appear to be brightening from H2 2021 onwards. Yet the current virus surge is stifling near-term growth prospects,” cautioned Felicity Emmett, a senior economist at ANZ, in a Tuesday note.
“The market is assuming that we can see the end of the tunnel, that in 2022 a large part of the world’s population will start to receive access to vaccines,” said Herald van der Linde, HSBC’s head of equity strategy for Asia Pacific.
European Shares Slip After Vaccine-Driven Rally
European stocks eased from eight-month highs on Tuesday as tighter coronavirus restrictions across the continent halted a market rally that was powered by encouraging COVID-19 vaccine updates, Reuters reported.
The near-term economic outlook remains hazy, with Sweden moving to restrict the size of public gatherings as COVID-19 cases spike and a British medical adviser suggesting strengthening the three-tier system of restrictions when the full lockdown in England ends, Reuters said.
Meanwhile, European banks retreated after a more than 3% surg. BBVA fell 3.4% after it and smaller rival Sabadell said they were in talks to create Spain’s second-biggest domestic lender by assets.
For a look at all of today’s economic events, check out our economic calendar.