The Market Believes That Life Will Soon Get Back To Normal
S&P 500 futures are up about 2% in the premarket trading session as investors and traders are optimistic about the prospects for economic recovery.
Today, S&P 500 will likely test the 3000 level and try to stay above it as market participants bet that the worst is over while hoping that governments and central banks will continue to flood the financial system with money.
European countries are moving to relax travel restrictions ahead of the summer season, so travel stocks may get a boost today. In general, the worst fears were not realized in practice as people in various countries were ready to return to their regular lives, providing support to various businesses in the hard-hit services segment.
Oil Continues Its Upside Move
Oil is back to the upside mode following a temporary pullback on Friday. Oil traders gain confidence about the depth of oil production cuts and believe that transportation demand will recover sooner than previously expected.
The oil rally provides support for many oil-related equities and serves as an important catalyst for additional upside of S&P 500.
That said, oil continues to trade at low levels – the front-month contract for WTI trades near $34 per barrel, while the front-month contract for Brent is at the $36 level.
These price levels put the existence of many higher-cost oil producers at risk, especially among U.S. shale oil companies, and the industry is clearly not out of the woods yet.
Market Optimism Will Get Tested By A New Portion Of Economic Data
The U.S. stock market has successfully shrugged off the bad economic data that was released in recent weeks. However, the market may pay increased attention to economic numbers as stocks rise to new highs.
This week, traders will digest the second estimate of GDP Growth Rate for the first quarter. In addition, the market will evaluate the new Initial Jobless Claims and Durable Goods Orders reports. All these reports are scheduled to be published on Thursday.
The economic data is set to look grim for the upcoming months, but the key question is at what market level it will start to impact the stock price dynamics.
For a look at all of today’s economic events, check out our economic calendar.