Global Stocks, U.S. Futures Move Higher on Memorial Day—and What Else Is Happening in the Stock Market Today

Futures for the Dow Jones Industrial Average rose 230 points, or 0.7%, after the index rallied 575 points on Friday. S&P 500 futures were 1% higher with futures tracking the Nasdaq 1.4% into the green. U.S. markets are closed Monday in observance of Memorial Day, with stock and bond trading resuming on Tuesday.

Overseas, the pan-European Stoxx 600 climbed 0.8% and Tokyo’s Nikkei 225 gained 2.2%.

Global investors took their hint from a late-in-the-day rally on Wall Street last Friday to advance on Monday. U.S. stocks surged to close out the week amid hopes that the Federal Reserve would be less aggressive in tightening monetary policy, driven by signs that multi-decade high inflation is cooling.

The upbeat mood in the market was helped by positive signs out of China, where disruptive Covid-19 lockdowns have rattled global supply chains and threatened to stoke inflation even higher.

“Shanghai announced a raft of stimulus measures and both Shanghai and Beijing eased Covid-19 restrictions,” said Jeffrey Halley, an analyst at broker Oanda. “Another tailwind was the strong performance by Wall Street on Friday, which closed out a banner week prompting the usual ‘maybe this is the bottom’ response from the financial press and [fear-of-missing-out] investors. “

But the Fed remains top-of-mind. How much the central bank will tighten monetary policy—and raise interest rates—to tackle inflation in the year ahead is a key focus for investors. The risk is that the Fed will move so aggressively as to cause a recession.

“From central banks, investors will be awaiting this Wednesday when the Fed is due to start its balance sheet run off in order to gauge the preliminary impact on the markets,” said Jim Reid, a strategist at Deutsche Bank. 

While momentum from the stock market rally of last Friday looks to be continuing into this week, investors are still under pressure after significant declines this year. The S&P 500 remains in correction, down 13% this year, with the tech-focused Nasdaq in a bear market, more than 23% lower in 2022.

“A week of positive developments is not sufficient to call an end to recent volatility,” said Mark Haefele, the chief investment officer at UBS Global Wealth Management. Haefele pointed to Wall Street’s so-called fear gauge, the CBOE Volatility Index, which closed below 26 on Friday from a peak of 35 earlier this month.

“This is still above the long-term average and is consistent with daily moves of around 1.6% in the S&P 500,” Haefele said.

Here are two stocks on the move Monday:

Siemens (ticker: SIE.Germany) rose 3% in Frankfurt trading, after the German industrial giant struck an €8.1 billion ($8.7 billion) deal to build high-speed rail in Egypt.

Stellantis (STLA.Italy) rose 1.5% in Milan trading, after the automaker behind brands including Dodge, Fiat, and Peugeot announced a new agreement with Toyota on commercial vehicles for the European market.

Write to Jack Denton at [email protected]