Futures point to higher open on Wall Street as Powell talks recovery

Stock futures opened marginally higher on Sunday, indicating a boost to Wall Street when Monday’s session begins, after major benchmarks ended a volatile week on an unexpectedly upbeat note.

Despite a raft of grim data, investors are reacting to states and cities that are slowly reactivating public life. Hopes for a relatively brisk economic revival are counterbalancing figures that have underscored how badly the coronavirus pandemic has damaged the U.S. economy.

The latest came in the form of April retail sales, which plunged at a startling rate of 16.4% — the worst ever monthly read and initially weighed on Wall Street stocks. Yet by the end of Friday’s session, benchmarks reversed as markets bet on the gradual relaxation of stay-at-home orders that have suffocated the economy.

The worse than expected data led a number of economists to estimate an even larger than previously anticipated hit for second-quarter growth in gross domestic product (GDP). Economists at Barclays now expect GDP to fall by 42% on an annualized basis in the second quarter, or two percentage points worse than their earlier forecast.

The brisk rally that’s carried stocks off March’s multi-year lows has made some analysts nervous that investors are being too optimistic, given that there’s neither an approved coronavirus treatment or vaccine on the immediate horizon.

Amid rising fears of a potential second wave of infections, Federal Reserve Chairman Jerome Powell said on Sunday a U.S. recovery may take longer than expected, and a full comeback may depend on a vaccine.

In a teaser for CBS’s “60 Minutes” news show, Powell said that “assuming there is not a second wave of the coronavirus, I think you will see the economy recover steadily through the second half of this year. For the economy to fully recover people will have to be fully confident and that may have to await the arrival of a vaccine.”

The plunge in consumer spending has been amplified by the unprecedented loss of jobs, highlighted by the latest report on initial unemployment claims, which on Thursday showed a greater than expected 2.981 million Americans filed for first-time unemployment benefits last week. This brought the total number of new claims filed since the week ended March 20 to a staggering 36.5 million.

Meanwhile, states across the nation and some countries around the world have begun, or have discussed, a phased reopening of businesses as case growth slows for the coronavirus outbreak. The U.S. Centers for Disease Control and Prevention issued new guidance to inform states how to reopen public spaces including bars, restaurants and offices.

6:00 p.m. ET Sunday: Stock futures eke out gains

Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:00 p.m. ET:

  • S&P 500 futures (ES=F): 2,853.00, up +6.50 or +0.23%

  • Dow futures (YM=F): 23,568.00, up +51.00 or +0.22%

  • Nasdaq futures (NQ=F): 9,119.00, up +22.50 or +0.25%

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