Stock futures traded considerably higher on Tuesday as the trading week began as investors are watching the news regarding the potential COVID-19 vaccine development. Yesterday, it was Memorial day so U.S. markets were closed. The Dow Jones Industrial Average rose more than 550 points.
U.S. Futures Up as Novavax Keeps Progressing in Vaccine Development
American biotech company Novavax Inc (NASDAQ: NVAX) confirmed on Monday that it started the first human study of its experimental coronavirus vaccine. The company said it expects first results on safety and immune responses in July. Last week, we wrote about biotech company Moderna that also released the data on positive development on its vaccine trial where all 45 participants had developed coronavirus antibodies.
The moves after the vaccine news in stock futures followed a solid week for Wall Street that saw the 30-stock Dow rise 3.3%, posting its best weekly performance since April. The S&P 500 and Nasdaq also climbed more than 3% last week.
According to the latest information, the U.S. record a significant fall of COVID-19 infections in most of its states. More than 1,7 million people were overall infected with the virus. However, almost 465,000 were reportedly recovered. The death toll in the country is still high though – 99,805 people according to the latest data. Approximately 17,000 people are still in hospital in critical condition.
U.S.-China Tensions Rise
However, we shouldn’t forget that during the last month, the tensions between the United States and China came to investors’ focus as well. White House National Security Advisor Robert O’Brien said on Sunday the U.S. will likely impose sanctions on China if Beijing imposes national security law that would give it greater control over autonomous Hong Kong.
China’s central government on Friday introduced a national security law in Hong Kong because the territory’s authorities have not been able to do it locally for over 20 years.
Bernard Chan, a deputy to the National People’s Congress said:
“In fact, it is a failure at the legislature that we have not delivered this national security law for 23 years. Basically, the mainland has delegated that legislation to us, to Hong Kong, to do ourselves but we failed in 23 years.”
He added that after the last year, there are now serious security issues they need to address. It’s hard to pass legislation in Hong Kong these days, “so the central government is taking the initiative and going forward with it.”
“Next month we will know Bank stress test results; whether oil prices are a bounce or something more sustained; and if we have moved out of COVID season or into a second wave. If things break positively, we would expect to see a healthy rotation toward cyclicals, smaller caps, and value stocks.”
Treasury Yields on the Rise
Meanwhile, U.S. government debt prices were lower on Tuesday also due to the encouraging news related to a coronavirus vaccine development, still driving some risk-on sentiment from investors. At around 4:25 a.m. ET, the yield on the benchmark 10-year Treasury note was up at 0.6949% and the yield on the 30-year Treasury bond rose to 1.4129%. Yields move inversely to prices. On the data front, S&P/Case-Shiller home price readings for March are due at 9 a.m ET Tuesday, before April’s new home sales figures at 10 a.m. ET.
Auctions will be held Tuesday for $63 billion of 13-week Treasury bills, $54 billion of 26-week bills, $65 billion of 42-day bills and $44 billion of 2-year notes.
At 5:48 am ET, the Dow Jones was rising over 520 points or 2.15%. The Nasdaq was rising 1.84% while the S&P 500 jumped 1.55%.