U.S. Stocks Set To Open Higher As Traders Continue To Bet On Recovery

Stocks Continue Their Upside Move Amid Hopes For More Stimulus And News About COVID-19 Drug

S&P 500 futures are gaining ground in the premarket trading session as traders bet that the U.S. Fed will continue to support financial markets via expanded stimulus programs.

In addition, the World Health Organization stated that it would update its guidelines for COVID-19 treatment to include dexamethasone, a cheap steroid that has shown its effectiveness in saving critically ill patients.

At this point, the market is completely ignoring the fears of a second wave of coronavirus which have led to the recent sell-off. Meanwhile, China is implementing strict virus containment measures in Beijing as new COVID-19 cases continue to emerge.

Building Permits Increase By 14.4%

The U.S. has just provided reports on Housing Starts and Building Permits for May.

Housing Starts increased by 4.3% month-over month while Building Permits grew by 14.4%. The data shows that the housing industry is starting to recover from the acute phase of the coronavirus crisis.

It is not surpising to see that Building Permits are recovering faster than Housing Starts since it is easier to issue a permit than to start building a house at a time when certain virus containment measures are still in place.

Oil Falls On Worries About The Second Wave And Higher Inventory Levels

While the stock market decided to ignore the recent developments on the virus front, oil is less immune since demand for oil is immediately reduced when virus containment measures are implemented. The above-mentioned strict virus containment measures in China include suspension of flights to and from Beijing.

In addition, yesterday’s API Crude Oil Stock Change report has shown that oil inventories increased by 3.9 million barrels. Inventories continue to build in the midst of the driving season which is bearish for near-term oil price dynamics.

It remains to be seen whether oil-related stocks will decline together with the price of oil since the market seems to be focused on the future and expects a major improvement in supply/demand balance due to the implementation of oil production cuts.

For a look at all of today’s economic events, check out our economic calendar.