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7:18 am Coronavirus cases continue to increase. The earnings season is preparing to begin. And the Dow Jones Industrial Average futures are rising. That is not as contradictory as it sounds.
The stock market rebounded on Monday just where it left off on Friday. Dow futures have advanced 205 points, or 0.8%, while S&P 500 futures have increased 0.7% and Nasdaq Composite futures have gained 0.9%. The Nasdaq will attempt a fourth consecutive day of earnings and a record-breaking fourth.
It does not matter that coronavirus cases continue to increase. More than 15,000 people in Florida tested positive, setting a national record for the largest one-day gain. The seven-day averages reached new highs in Alabama, Mississippi, North Carolina, and other states. But at least Disney World is open again.
So why is the market holding so well, with Nasdaq hitting new highs and the S&P 500 and Dow looking to run to their June highs? Maybe the earnings season has something to do with it. PepsiCo (ticker: PEP) reports on Monday, followed by the first of the big banks: Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC), on Tuesday. The earnings are expected to be dire, but what corporate America is saying about the coronavirus recovery path could help stocks remain optimistic.
“The second quarter, given the confluence of conflicting trends, will be overlooked in favor of more forward-looking guidance and management commentary, especially in the absence of formal financial projections,” writes Jared Holz of Jefferies from the health, but it really applies to almost everything.
Look at what they say, not what they do.
Write to Ben Levisohn at [email protected]
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