The Monday Market Minute
- Global stocks rebound as bond markets retreat and investors shift focus to near-term growth prospects over inflation concerns.
- Benchmark 10-year Treasury note yields ease to 1.436% following last week's surge as cash flows into equity funds accelerates.
- Johnson & Johnson receives FDA Emergency Use Authorization approval for its its single-shot coronavirus vaccine, promising to delivery 20 million doses this month.
- CDC administers 2.2 million doses Saturday, bringing seven-day average to 1.4 million.
- House lawmakers approve President Biden's $1.9 trillion stimulus plan, with a tight partisan vote expected in the Senate later this week.
- Oil prices hold near 13-month highs despite a weaker U.S. dollar as factory activity impresses, posing a potential headwind to stocks throughout the week
- U.S. equity futures suggest firmer open on Wall Street ahead of ISM Manufacturing data at 10:00 am Eastern time.
Wall Street futures surged higher Monday as bond markets around the steadied and investors shifted focus from inflation to near-term growth prospects following the weekend approval of Johnson & Johnson's (JNJ) single-shot coronavirus vaccine.
Last week's bond market moves, which saw benchmark 10-year Treasury note yields surge past 1.6% for the first time in nearly two years -- overtaking the dividend yield on the S&P 500 -- hammered tech stocks and broader U.S. equities as inflation concerns and bets on Federal Reserve rate hikes accelerated.
However, with the U.S. Food & Drug Administration's near unanimous approval of Johnson & Johnson's recently-developed COVID vaccine, alongside the House of Representatives passage of President Joe Biden's $1.9 trillion stimulus bill, markets are shifting gears in anticipation of a near-term end to the global pandemic.
Data from the Centers for Disease Control indicates that more than 75 million vaccine doses have been administered, with more than 50% of over 65s receiving at least one of either the Pfizer Inc. (PFE) or Moderna Inc. (MRNA) jab.
A broader retreat for bond yields, as well, is supporting a solid start for the week in equity markets, as 10-year notes fall to 1.436% and the U.S. dollar index rises 0.22% against a basket of its global peers to 91.081.
Futures contracts tied to the Dow Jones Industrial Average suggest a 310 point opening bell gain, while those linked to the broader S&P 500, which is up 1.5% for the year, are priced for a 38 point advance.
The tech-heavy Nasdaq, which slipped into the red for the month of February and is only up 0.16% for the year, is set to gain around 150 points at the start of trading Monday, powered by pre-market gains for Apple (AAPL) and Tesla (TSLA) .
Johnson & Johnson shares were marked 3.5% higher at $164.00 each following the FDA's weekend decision and guidance from the drugmaker that suggested as many as 20 million doses of its vaccine will be administered this month, with a target of 100 million by the end of June.
With earnings season effectively in the rear-view mirror -- around 96% of the S&P 500 has reported -- collective profits are forecast to rise 4.2% from the same period in 2019 to a share-weighted $359.2 billion.
Earnings growth is also forecast to improve over the first three months of the year, according to data from Refinitiv, with earnings expected to rise 21.2% to $331.3 billion.
Oil prices are a potential headwind to stock prices this week, however, as WTI and Brent crude hold near 13-month highs despite an overnight rebound in the U.S. dollar and waning inflation bets.
WTI futures for April delivery were marked 53 cents higher from Friday's New York close and trading at $62.03 per barrel in early European hours, while Brent contracts for May, the global benchmark, added 60 cents to trade at $65.03 per barrel.
European stocks, in fact, kicked-off with the week with solid gains, fueled by the pullback in bond yields, a weaker euro and better-than-expected factory activity day from the final reading of Markit's manufacturing PMI survey for the month of February.
The Stoxx 600 was marked 1.25% higher in Frankfurt, while Britain's FTSE 100 added 1.2% in London as the pound eased to 1.3944 against the green back.
Solid gains were found overnight in Asia, as well, with a 2.4% jump for the Nikkei 225 in Tokyo, powered by the fastest reading for factory activity in at least two years, and a 1.3% advance for the region-side MSCI ex-Japan index.