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Dow Futures Signal Big Rally Post-Memorial Day as Economy Shows Signs of Life

Sam Bourgi
Last Updated September 23, 2020 1:58 PM
  • The Dow Jones Industrial Average rallied nearly 300 points in futures trading Monday night.
  • Although the economy has likely plunged into recession, key indicators such as mortgage applications and travel bookings are up slightly.
  • The Atlanta Fed’s GDP tracker estimates a second-quarter contraction of 41.9%.

U.S. stock futures rose sharply Monday evening, as investors rallied behind early signs that the worst of the economic crisis had passed.

Dow, S&P 500, Nasdaq Futures Climb

Futures on all three major U.S. indexes broke to the upside Monday evening. Dow Jones futures rose by as much as 298 points or 1.2% before paring gains. S&P 500 futures  rose 1.1%, while the Nasdaq 100 mini contract climbed 1.2%.

Dow Jones futures
Dow Jones futures are holding gains of 228 points Monday evening. | Chart: Yahoo Finance 

Dow futures climbed in Monday’s shortened session, though regular trading via the New York Stock Exchange remained closed for Memorial Day.

U.S. Economy: Has the Worst Passed?

Equity markets are rallying on hopes that the U.S. economy is starting to come back to life–perhaps earlier than some had expected.

Although a technical recession appears certain, the decline in consumer spending may have already hit bottom. Consumer spending, which accounts for more than two-thirds of GDP, is on the rise at hotels, restaurants, and airlines, according to The Wall Street Journal .

TSA passenger screening
Nearly 350,000 passengers were screen at U.S. TSA airport checkpoints on May 22. That’s a roughly four-fold increase from a month earlier. | Chart: The Wall Street Journal 

Mortgage applications are also rebounding as more homebuyers look to capitalize on record-low interest rates.

And while new jobless claims are in the millions , they’re much lower than levels seen throughout March and April.

US economy, 2020
More than 38 million Americans have filed for unemployment benefits the last nine weeks, but first-time filings appear to be sloping downward. Has the worst passed? | Image: AP Photo/Morry Gash

Economic data will be in the spotlight this week. On Tuesday, the Commerce Department will report on April’s new home sales. S&P/Case-Shiller will produce the latest home-price data for key markets across the country.¬†Separately, the Conference Board will release its latest consumer confidence index.

Shifting gears to Thursday, government economists will report on durable goods orders, revised first-quarter GDP, and initial jobless claims.

The latest batch of inflation data is scheduled for release Friday morning.

GDP contracted 4.8% annually in the first quarter , according to the government’s initial estimate. Second-quarter GDP is expected to contract by a staggering 41.9%, according to the Atlanta Federal Reserve Bank.