Stock futures added to gains Wednesday evening, with tech shares continuing their relentless march higher as overnight trading kicked off.
During the regular session earlier Wednesday, the Nasdaq Composite and individual names including Amazon (AMZN), Microsoft (MSFT), Apple (AAPL), Facebook (FB) and Netflix (NFLX) each hit all-time highs.
Other non-FAANG tech names including Tesla, Zoom Video Communications, eBay, PayPal and Nvidia also rose to record levels, with investors continuing to seek out shares of companies viewed as more insulated from the fallout from the coronavirus pandemic. The Renaissance Capital IPO (IPO) exchange-traded fund – exposed to some of the biggest newly public firms – also rose to a record high as growth companies outperformed.
“We do recognize that bond-like and secular growth stocks (e.g., mega-cap tech, indices such as Nasdaq 100) are already at new all-time highs. Crowding in these stocks indeed reached elevated levels,” JPMorgan strategist Marko Kolanovic wrote in a note Wednesday. “This is in part the result of long-short trades where portfolio managers are buying mega-cap tech and momentum stocks while shorting smaller cyclical and value stocks.”
“This trade is in part driven by market expectations for the COVID-19 pandemic to worsen (or not get better) and lead to permanent shifts in the economy. Another driver is the market’s current expectation of a high probability of a Biden win in the US elections,” he added. “We think the market is not properly pricing either of these events, a repricing of which could result in a rapid momentum selloff and value rally (e.g., tech vs banks, or tech vs energy).”
In the US, the pandemic situation worsened further on Wednesday, with confirmed cases topping three million to comprise more than 25% of the global total. California reported its largest one-day jump in new cases yet at 11,694 as of Wednesday, and case growth in Florida and Arizona remained elevated relative to the national average.
After market close Wednesday, Bed Bath & Beyond (BBBY) shares slumped after announcing a wider than expected first-quarter loss, and the company’s plans to close 20% of its stores in the next two years as a cost-cutting measure during the pandemic.
Thursday morning, investors will receive the latest report on weekly unemployment claims, which is expected to show another 1.375 million individuals filed new jobless claims last week. That would mark a decline from the prior week’s 1.427 million new claims, albeit at a slowing pace since new claims began dropping from a peak of over 6.8 million in early April.
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Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:03 p.m. ET:
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S&P 500 futures (ES=F): 3,167.75, up 4.25 points or 0.13%
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Dow futures (YM=F): 26,014.00, up 45 points, or 0.17%
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Nasdaq futures (NQ=F): 10,682.5, up 20.25 points, or 0.19%
A trader walks in front of the New York Stock Exchange (NYSE) on May 26, 2020 at Wall Street in New York City. – Wall Street stocks surged early May 26, 2020 on optimism about coronavirus vaccines as the New York Stock Exchange resumed physical floor trading for the first time since late March. About five minutes into trading, the Dow Jones Industrial Average was up 2.3 percent at 25,023.76. The broad-based S&P 500 gained 2.0 percent to 3,013.04, while the tech-rich Nasdaq Composite Index advanced 1.6 percent to 9,468.96.The gains came after a ceremony presided over by New York Governor Andrew Cuomo, who wore a mask as he rung the opening bell to signal the start of the day for traders, also clad in masks and separated by plexiglas. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
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