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Markets Remain Exuberant to Start a New Week

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Monday, June 8, 2020

To kick off a new trading week, we see no new economic reports to temper trading attitudes. As a result, the animal spirits that grabbed the market Friday after a shocking U.S. jobs report that produced 2.5 million new jobs in May (instead of losing 8 million, as had been projected) continue into Monday ahead of the opening bell. This comes as New York City embarks on its long-awaited reopening this Monday.

Last week, the Dow rose 7%, and stands at its highest level since February 24, based partly on the strong employment numbers, expected gains as the U.S. economy continues to awaken and a turnaround in aircraft production at Boeing (BA - Free Report) , which is pulling up the Dow and trading +9% in the early session. Boeing’s shares are up almost 42% in the last week alone, based on previous announcements about bringing back its much-maligned 737 MAX model onto the assembly line.

On the S&P 500, also at its highest point currently since late February, the index continues to climb partly on the huge upswings among U.S. airlines. In particular, American Airlines (AAL - Free Report) is up a whopping 97% in the last month, with United (UAL - Free Report) up 80% over that time period. Bookings have finally begun to increase for air travel. On Sunday, more than 441K flying passengers passed through the gates in the U.S. That’s still down 80% year over year, but analysts see this comeback continuing at least through the summer months.

Meanwhile, in New York City today, an estimated 200K-400K non-essential workers will return to their places of business today, increasing public transit use as well as auto traffic — cars, cabs, Uber (UBER - Free Report) , etc. Following the worst outbreak of COVID-19 cases in the country, but also the biggest money-generating city in the U.S., expectations are currently rife with hope and trepidation. Not only a second outbreak of coronavirus is on residents’ minds, but also are the more-recent lootings of New York shops and boutiques, which helped obscure peaceful protests of the past two weeks.

As a result, some of the Big Apple’s top retailers, like Macy’s (M - Free Report) and Coach parent Tapestry (TPR - Free Report) , are proceeding more cautiously. Staggering openings and work schedules, as well as reducing commuter traffic congestion and keep social distancing measures, will now go with face masks and plenty of hand sanitizer in public workplaces. Hair and nail salons in NYC will remain closed for the time being. Yet developments in already reopened big cities around the world, from Tokyo to Berlin, show that proper care in heavily trafficked cities can keep a new outbreak of COVID-19 at bay.

Pre-markets are off their morning highs, but still mostly robust: the Dow looks to ring in the open up 200 points, the S&P 500 up 15, with the Nasdaq flat at this hour. U.S. COVID-19 cases have nearly reached 2 million, with 118K fatalities. Worldwide, 6.8 million cases are confirmed, with 397K deceased as of the start of this week. The first case of COVID-19 was discovered in the U.S. on January 20th — 20 weeks ago today.

Mark Vickery
Senior Editor

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