Dow Futures Rise 100 Points After Last Week’s Big Market Rotation

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U.S. equity futures rose on Sunday night as traders assessed a strong market rotation that led to a mixed weekly performance last week.Dow Jones Industrial Average futures rose 101 points, or 0.3%. S&P 500 futures traded up 0.5% and Nasdaq 100 futures traded up 0.6%.

The S&P 500 posted a record closing Friday and posted a one-week gain of 2.2%. The Dow Jones rallied over 4% last week and briefly hit an intraday high last week. The Nasdaq Composite lagged behind, however, slipping 0.6%.

These moves came as traders piled up on battered value stocks at the expense of high-end growth stocks amid positive vaccine news. The exchange-traded fund iShares Russell 1000 Value (IWD) rose 5.7% last week, while its growth counterpart, the iShares Russell 1000 Growth ETF (IWF), fell 1.2%.

Pfizer and BioNTech said last week that their coronavirus vaccine candidate was over 90% effective at preventing Covid-19 participants in an advanced stage trial. This news raised hopes of an economic recovery, making value stocks like United Airlines and Carnival Corp more attractive. United and Carnival are up 12.4% and 15.9%, respectively, last week.

“The announcement of an effective Covid-19 vaccine by Pfizer / BioNTech last week was so important that we almost forget there was a US presidential election,” wrote TS Lombard analysts Steven Blitz and Andrea Andrea Cicione in a note.

“The vaccine turns what could have been a protracted crisis into something closer to a natural disaster (big shock, rapid recovery),” they said. “Without an effective vaccine, the current consensus expectations for BPA (indicating a return to the trend by the end of next year) would be optimistic. But with just one, they could actually come true. ”

To be sure, the number of coronavirus cases continues to rise, threatening the prospects for a rapid economic recovery.

More than 11 million Covid-19 infections have been confirmed in the United States, according to data from Johns Hopkins University. Data from the COVID tracking project also showed that a record more than 68,500 people in the United States are hospitalized with the coronavirus.

However, Dan Russo, chief market strategist at Chaikin Analytics, believes the market can overcome this latest spike in coronavirus cases.

“It appears investors are more focused on vaccine news and are willing to look past the short-term peak in cases,” he said in a post. “If this becomes a source of concern for investors, it will become evident in the charts and risk management will take over. ”

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