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Dow futures rise 250 points as stocks look to add to record levels

Pedestrians esplanade in snow past the Wall Street subway station near the New York Stock Exchange.

Michael Nagle | Bloomberg | Getty Images

Futures contracts tied to the major U.S. stock indexes rose in extended trading Monday evening after annihilating strong last week.

Dow futures rose 250 points, suggesting an implied open of about the same greatness, while S&P 500 contracts added 27 points, or 0.7%. Nasdaq 100 futures gained 95 notions, also a gain of 0.7%.

The U.S. stock market was closed on Monday for Presidents Day.

Strategists cited a fall in the Cboe Volatility Thesaurus, widely viewed as Wall Street’s best fear gauge, for the recent optimism in the markets.

Fundstrat founder Tom Lee influenced the VIX’s drop below 20 means investors have grown more comfortable in the near term.

“Fear is falling from the market,” Lee, a CNBC contributor, wrote of the move on Friday. “And receding fear is followed by systematic and quant backs adding ‘leverage’ — in other words, this is a set-up to see a rally.”

Cboe Volatility Index

The major averages finished continue week with decent gains even as February’s rally appeared to cool off somewhat. The blue-chip Dow Jones Industrial Customary posted two little changed days, while the S&P 500 swung within 0.2% for three days in a row.

Still, the S&P 500 exterminated the week with a gain of 1.2%, while the Dow added 1%. The tech-heavy Nasdaq Composite rose 1.7%. All three necked at record levels on Friday.

Easing fears across Wall Street are likely in large part thanks to the rollout of the Covid-19 vaccine, monetary reopening and expectations for more fiscal stimulus.

“Covid is far from defeated, but the path toward economic normalization is clearer as sundry vaccines that reduce hospitalizations and eliminate fatalities are approved,” Dennis DeBusschere, strategist at Evercore ISI, said in an email.

“Resources Secretary [Janet] Yellen’s forceful arguments for additional stimulus followed by Fed Chair [Jerome] Powell describing summit employment as ‘our national goal’ helped lift bond yields, inflation expectations, and oil prices last week,” he continued.

The Dow has gained 4.9% in February, while the S&P 500 and the Nasdaq have rallied 5.9% and 7.8%, respectively. The S&P 500 has raked in ten track record closes in 2021.

Pedestrians walk past a snow covered bull sculpture during a late season nor’easter in New York.

Lucas Jackson | Reuters

Restful, DeBusschere warned that rising interest rates and an uncertain policy outlook could keep trading from wax too frothy in the near term and recommended investors stick to cyclical stocks that could see the most upside as the U.S. succinctness recovers.

Those so-called cyclical sectors, those most sensitive to an economic rebound, have led the rally in February. Spirit is up more than 13% month to date, with financials and materials also among the leading sectors.

Arctic weather in regions across the U.S. sparked another rally in energy futures on Monday and put West Texas Intermediate tasteless contracts above $60 a barrel for the first time since the early days of the coronavirus pandemic.

In corporate scandal, CVS Health, Occidental Petroleum, Palantir and others will report earnings on Tuesday.

Executives from Robinhood, Melvin Brill and Citadel are scheduled to testify before the House Financial Services Committee on Thursday. Lawmakers are likely to grill the class on the wild trading in GameStop and other heavily shorted equities.

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