By Peter Nurse
Investing.com - U.S. stocks are set to open higher Monday, rallying as investors look for a strong economic recovery in the second half of the year despite the resurgence of coronavirus cases in many states.
At 07:05 AM ET (1105 GMT), S&P 500 Futures traded 33 points, or 1.1%, higher, Nasdaq 100 Futures up 117 points, or 1.1%. The Dow Futures contract rose 343 points, or 1.3%.
The U.S. economy gained 4.8 million jobs in June, data released before the long holiday weekend showed, much more than expected.
“It shows how the re-openings have allowed businesses to get into gear and bring workers back,” said analysts at ING, in a research note.
Economic data out of Europe and China are also indicating that a recovery is underway, prompting strong equity gains in both regions. There is a great deal of optimism that U.S. services data for June, due for release later Monday, will show that this sector is expanding again.
Adding to the positive tone is the idea that another stimulus package could soon be agreed upon by the country’s political leaders.
On Thursday, Treasury Secretary Steven Mnuchin said the administration is "very seriously considering" a second round of stimulus checks, according to The Wall Street Journal.
This may well be needed given the upsurge in new Covid-19 cases, with the U.S. recording over 150,000 new cases over the long holiday weekend. This has resulted in local lockdowns in many of its more populous states.
This has prompted Goldman Sachs (NYSE:GS) to revise down its estimates for the U.S. economy this quarter, now expecting the economy to grow 25% in the third quarter having previously predicted 33%. That would result in the economy slumping 4.6% this year, worse than the 4.2% previously seen.
“A combination of tighter state restrictions and voluntary social distancing is already having a noticeable impact on economic activity,” Goldman economists said in a report published on Saturday.
In corporate news, Berkshire Hathaway (NYSE:BRKa) will be in the spotlight after saying on Sunday that its energy unit will buy Dominion Energy's (NYSE:D) gas transmission and storage network for $4 billion.
Uber (NYSE:UBER) will also be in focus after Bloomberg reported that the ride-sharing company has agreed on a deal to buy food-delivery app Postmates in a $2.65 billion all-stock agreement.
Oil prices pushed higher Monday, as Saudi Arabia, the world’s largest exporter, reinforced confidence that the physical market is approaching balance, raising its official selling prices for all types of its crude in August by $1, relative to the Oman/Dubai average.
That said, the continued growth of new coronavirus cases in the U.S. resulted in an underperformance from the American benchmark, WTI futures.
At 7:05 AM ET, U.S. crude futures traded 0.1% higher at $40.66 a barrel. The international benchmark Brent contract rose 1.2% to $43.30.
Elsewhere, gold futures fell 0.2% to $1,786/oz, while EUR/USD traded at 1.1299, up 0.5% on the day.