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U.S. Stocks Mixed As Market Waits For New Catalysts

By:
Vladimir Zernov
Published: May 19, 2020, 12:51 UTC

S&P 500 futures are swinging between gains and losses during the premarket trading session after yesterday's major rally.

U.S. Stock Market

Stocks Take A Pause After Recent Rally

S&P 500 futures are swinging between gains and losses following yesterday’s major upside move which was caused by positive results in early trial of Moderna’s coronavirus vaccine.

Optimism about a potential vaccine and the gradual reopening of the world economy will serve as bullish catalysts for stocks. Meanwhile, the grim economic data and fears about the second wave of coronavirus will be the source of downside risks for the market.

Now that European countries have started to reopen their economies, some of them are witnessing an uptick in coronavirus cases.

For example, the Czech Republic, which has been successful in containing the virus and was one of the first countries to lift virus containment measures, has reported its biggest increase in new coronavirus cases in four weeks.

France also saw an uptick in confirmed cases. It is yet to be seen whether these upticks can turn into something more serious but clearly the risks of another outbreak have not been eliminated.

Housing Starts Decline By 30.2% In April

The U.S. has just released April data for Building Permits and Housing Starts. Not surprisingly, the coronavirus pandemic and the related virus containment measures have put significant pressure on the homebuilding industry.

Building Permits declined by 20.8% month-over month while Housing Starts were down 30.2%. Both numbers look grim but the market will likely focus on the pace of the recovery rather than on the damage done in April.

Oil Flat On Settlement Date

May 19, 2020 is the settlement date for WTI June 2020 contract, and this time there’ll be no wild action.

In April, the May 2020 contract declined into the negative territory on fears about oil storage availability, but these fears have been eliminated due to supply cuts in the U.S. and elsewhere in the world.

Oil has returned back above $30 on optimism about the reopening of the world economy and production cuts, and now the key question is whether it will be able to hold on to current levels.

Many oil-related stocks had decent upside from mid-March lows, and continued positive trend in the oil market could help S&P 500 get to the 3000 level.

 

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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