U.S. stock-index futures on Friday pointed to gains for the week for benchmark equity indexes amid rising cases of coronavirus in some states, while reports that China may increase the pace of American farm purchases also gave prices a boost.
Friday also marks quadruple witching, which occurs on the third Friday of the month in March, June, September and December and can cause higher volumes and volatility as single-stock options, single-stock futures, and stock-index options and stock-futures all expire.
How are benchmarks performing?
Futures for the Dow Jones Industrial Average YM00, +1.05% YMM20, +1.04% gained 216 points, or 0.9%, at 26,118, those for the S&P 500 index ES00, +0.96% ESM20, +0.95% advanced 23.10 points, or 0.7%, at 3,120.50, while Nasdaq-100 futures NQ00, +0.86% NQM20, +0.88% were climbing 77.50 points, or 0.8%, at 10,060.50.
The most-active stock-index futures contract is the July contract, which expires on July 29.
For the week, the Dow DJIA, -0.15% is up 1.9% for the week, the S&P 500 index SPX, +0.05% has gained 2.4%, while the Nasdaq Composite Index COMP, +0.32% has returns 3.7% thus far this week, as of Thursday’s close.
What’s driving the market?
Stock-market investors have pushed equity values higher for another week, even as reports have pointed to rising coronavirus cases in Florida, Arizona, California and Texas, which all reported record-high single-day increases on Thursday.
Former Food and Drug Administration Commissioner Dr. Scott Gottlieb told CNBC on Thursday that the rising number of infections and hospitalizations risked going out of control for local governments.
“Investors are worried that the current coronavirus hot spots such as Texas, Florida, and many others may hamper the recovery while these individuals states continue to battle with the notion of keeping their economies open,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a Friday research note.
However, the resurgence of COVID-19 cases has not deflated the buoyancy of the stock-market this week. The Dow, S&P 500 and Nasdaq Composite headed into Friday trading on pace for their fourth weekly gain in five weeks. The Dow is up 1.9% week to date through Thursday’s close while the S&P 500 has gained 2.4% and the Nasdaq has climbed more than 3%.
Stocks may be getting a boost from a report by Bloomberg that China plans to accelerate purchases of American farm goods to comply with the phase one trade deal signed in January. Beijing intends to step up buying of everything from soybeans to corn and ethanol as the economic disruption caused by the coronavirus pandemic has meant China has only reached 13% of the 2020 target under the deal in the first four months of the year.
The report on trade may help quell worries about deteriorating Sino-American relations. President Donald Trump on Thursday said in a tweet that the U.S. could completely decouple from China, a day after his top trade adviser, Robert Lighthizer, said such a move wouldn’t be a reasonable policy
“This is one of the most forceful statements by Trump and traders are concerned about the possibility of this materializing into an actual reality,” Aslam wrote.
Friday also marks quadruple witching day for the quarter which can cause higher volumes and volatility as single-stock options, single-stock futures, and stock-index options and stock-futures all expire. About $1.8 trillion of S&P 500 options are scheduled to expire, making it the third-largest non-December expiration on record, according to data compiled by Goldman Sachs.
Friday also will see a quartet of Federal Reserve speakers, highlighted by Chairman Jerome Powell at 1 p.m. along with Cleveland Fed President Loretta Mester. Before that, Boston Fed President Eric Rosengren speaks at 10:15 a.m., while Fed Vice Chairman for Supervision Randal Quarles speaks at noon.