U.S. Stocks May Extend Recent Rally In Early Trading

After moving sharply higher over the course of the two previous sessions, stocks are likely to see some further upside in early trading on Wednesday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 241 points.

Early buying interest may be generated in reaction to reports of breakthroughs in the developments of treatments for the coronavirus.

A report from Reuters noted traders are pointing to a Chinese TV report indicating a research team at Zhejiang University has found an effective drug to treat people with the new virus.

Sky News also reported that a leading British scientist has made a significant breakthrough in the race for a coronavirus vaccine by reducing a part of the normal development time from “two to three years to just 14 days.”

Traders seem to be ignoring the response to the reports by the World Health Organization, which stated there are “no known” treatments against the virus.

“There are no known effective therapeutics against this 2019-nCoV and WHO recommends enrollment into a randomized controlled trial to test efficacy and safety,” the WHO said in a statement.

The agency added, “A master global clinical trial protocol for research and prioritization of therapeutics is ongoing at the WHO.”

Adding to the positive sentiment, payroll processor ADP released a report showing much stronger than expected private sector job growth in the month of January.

ADP said private sector employment soared by 291,000 jobs in January after jumping by a revised 199,000 jobs in December.

Economists had expected employment to increase by about 156,000 jobs compared to the addition of 202,000 jobs originally reported for the previous month.

“Mild winter weather provided a significant boost to the January employment gain,” said Mark Zandi, chief economist of Moody’s Analytics.

He added, “The leisure and hospitality and construction industries in particular experienced an outsized increase in jobs.”

Meanwhile, a separate report released by the Commerce Department showed the U.S. trade deficit widened in December amid a jump in the value of imports.

The Institute for Supply Management is also scheduled to release its report on service sector activity in the month of January shortly after the start of trading.

The ISM’s non-manufacturing index is expected to inch up to 55.1 in January from 55.0 in December, with a reading above 50 indicating service sector growth.

Stocks moved sharply higher during trading on Tuesday, extending the rebound from last Friday’s sell-off that was seen on Monday. With the strong upward move, the tech-heavy Nasdaq reached a new record closing high.

The major averages gave back some ground going into the close but held on to substantial gains. The Dow jumped 407.82 points or 1.4 percent to 28,807.63, the Nasdaq soared 194.57 points or 2.1 percent to 9,467.97 and the S&P 500 surged up 48.67 points or 1.5 percent to 3,297.59.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index advanced by 1 percent, while Hong Kong’s Hang Seng Index rose by 0.4 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has surged up by 1.4 percent, the French CAC 40 Index is up by 1 percent and the U.K.’s FTSE 100 Index is up by 0.6 percent.

In commodities trading, crude oil futures are jumping $1.35 to $50.96 a barrel after falling $0.50 to $49.61 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,556.40, up $0.90 compared to the previous session’s close of $1,555.50 On Tuesday, gold plunged $26.90.

On the currency front, the U.S. dollar is trading at 109.80 yen compared to the 109.52 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1009 compared to yesterday’s $1.1044.

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