U.S. stock futures nudged higher early Monday morning as Wall Street looks set to kick off June trading in positive territory after consecutive monthly gains.
Dow Jones Industrial Average futuresÂ traded 61 points higher, with an implied Monday opening gain of about 85 points.Â S&P 500Â andÂ Nasdaq 100Â futures also pointed to a positive open for the two indexes.
The moves in futures followed positive momentum in Monday trade for Asia, with Hong Kongâ€™sÂ Hang Seng indexÂ surging more than 3% in the afternoon. That came as data showed Chinaâ€™sÂ manufacturing activity in expandingÂ inÂ May. Investors have been monitoring Chinaâ€™s economic data for signs of recovery in the country, where theÂ coronavirusÂ was first reported.
Looking ahead, hereâ€™s what traders were monitoring heading into the new month:
â€śNothing that has happened since the market closed on Friday has been market positive,â€ť said Art Hogan, chief market strategist at National Securities. â€śWhen you think about clearly weâ€™re beginning to take U.S.-China tensions seriously and you add on to that the massive amount of disruption going on in almost every major city in the country right now, none of that could be seen as market positive.â€ť
â€śAt the levels weâ€™re at, I wouldnâ€™t be surprised to see the market take a pause and pull back,â€ť Hogan added.
The S&P 500 and Dow each gained at least 3% last week while the Nasdaq Composite advanced 1.8% to close out May. Those gains were propelled by increasing bets by traders that the global economy will successfully reopen after the coronavirus forces a shutdown of most economic activity.
Last weekâ€™s gains led the major averages to their first back-to-back monthly advances since late 2019. The Dow and S&P 500 gained 4.3% and 4.5%, respectively, for May while the Nasdaq Composite advanced 6.8%.
That advance also put the S&P 500 up 38% from its intraday low set on March 23.
â€śThe main downside risk facing stocks is a second wave of the disease,â€ť said Peter Berezin, chief global strategist at BCA Research, in a note to clients. â€śIf fears of a new outbreak were to escalate, risk assets would suffer.â€ť
Berezin added, however, he recommends a â€śmodest overweightâ€ť portfolio allocation to stocks, noting: â€śEven if a vaccine does not become available later this year, increased testing should allow for a more economically palatable approach to containment strategies.â€ť
More than 6 million coronavirus casesÂ have been confirmed globally, including over 1.7 million in the U.S., according to Johns Hopkins University. However,Â Novavax said last weekÂ is started Phase 1 clinical trials for its coronavirus vaccine candidate whileÂ Moderna said May 18 its early stage vaccine trial had yielded positive results.
In a post-coronavirus world, China looks set to grow while the rest of the world contracts