Stock futures struggle for direction after temporary boost from China factory data - MarketWatch

Stock-index futures flipped between small gains and losses Tuesday, after initially finding support following a rebound in Chinese manufacturing activity, as the country comes out of a lockdown due the coronavirus epidemic.

What are the major indexes doing?

Futures on the Dow Jones Industrial Average YM00, -0.25% were off 39 points, or 0.2%, at 22,128, while S&P 500 futures ES00, -0.36% also declined 0.2%. Nasdaq-100 futures NQ00, +0.05% were clinging to a 0.1% gain at 7,862.50.

Stocks were in rebound mode Monday, with the Dow DJIA, +3.19% rising 690.70 points, or 3.2%, to finish at 22,327.48. The S&P 500 SPX, +3.35% climbed 85.18 points, or 3.4%, to 2,626.65. The Nasdaq Composite Index COMP, +3.62% rose 271.77 points, or 3.6%, to 7,774.15.

What’s driving the market?

Analysts said the positive Chinese data and the strong finish for stocks on Monday set the stage for an upbeat start to trading on Tuesday. But concerns obviously remain over the spread of COVID-19 in the U.S., Europe and elsewhere, with economic activity under lockdown amid a rising tally of infections and a mounting death toll.

Global equities enjoyed a lift after data on China’s manufacturing and service sectors showed unexpectedly strong rebounds in March as the country emerged from the lockdown aimed at arresting the spread of COVID-19.

The official manufacturing purchasing managers index for manufacturing rose to 52.0 in March from a record low of 35.7 in February, the National Bureau of Statistics said Tuesday, topping expectations for a reading of 51.5. The 50 mark separates expansion of activity from contraction.

China’s official nonmanufacturing purchasing managers index climbed to 52.3 in March from a record-low reading of 29.6 in February.

The PMI readings were “well above expectations and almost too good to be a true for an economy that is still not fully functioning at its pre-crisis optimum level,” said Michael Hewson, chief market analyst at CMC Markets, in a note.

Analysts said the stock market’s strong rebound last week and further rally on Monday were encouraging, but the continued volatility made for a treacherous near-term trading backdrop. The debate over whether stocks put in a bear-market bottom on March 23 continues, with analysts noting that past downturns have also seen strong bounces from selloffs, followed by retests of the lows.

“Last week’s double-digit gain for markets was a welcome relief rally, though market bottoms are rarely as clean as this one has been. In 2000/01, there were four rallies of greater than 20% before ultimately reaching a bottom, and in the financial crisis, the S&P 500 had a false breakout of 27% before hitting a bottom,” noted Mark Hackett, chief of investment research at Nationwide, in a note.

Which companies are in focus?

• Cruise-line operator Carnival Corp. CCL, -11.17% said it would suspend its dividend and the repurchase of its common stock, in an effort to improve liquidity as the spread of COVID-19 has led to the pause of its fleet cruise operations. Shares rose 0.1% premarket after a 28% drop over the past two sessions and nearly 75% over the past three months.

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2020-03-31 11:29:25Z
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