Stocks are deep in the green on Tuesday, amid rocketing oil prices and optimism about a potential reopening of a number of states in the U.S.
The Dow Jones Industrial Average is trading more than 323 points higher, or 0.1.35%, while the S&P 500 gained 1.6% as of 1pm EST. The Nasdaq Composite is making the largest gains of the three benchmark indexes, adding 1.84%, led by a majority of green sectors including technology, energy, and healthcare. The Technology Select Sector SPDR Fund (XLF) has climbed more than 2% amid the optimism, while the Energy Select Sector SPDR Fund (XLE) gained 2.29%, and the Health Care Select Sector SPDR Fund (XLV) gained 2.51%.
Stock index ETFs are also rallying on the news for a second day, with the SPDR S&P 500 ETF Trust (SPY), the SPDR Dow Jones Industrial Average ETF (DIA), and the Invesco QQQ Trust (QQQ) all green in early afternoon trading.
Investors and analysts are excited but cautious about the prospect that the country will start to reopen gradually.
Former New Jersey Gov. Chris Christie said Monday that the country needs to reopen, despite unique, dire key coronavirus models that project thousands may die daily in the United States from Covid-19 and that more than 100,000 may die in total, a number that President Trump had mentioned before.
Despite the rally, however, WTI and Brent crude are still in a bear market, having plummeted 68% and 62%, respectively, from their 52-week high levels, and traders warn that recovery for oil prices may not be so swift. Even with global producers limiting operations, global storage is rapidly being depleted and some believe tank highs could be achieved within weeks.
“The path to recovery for oil demand in the US and globally is still up in the air,” Stacey Morris, director of research at Alerian.
And Nysveen believes the “market is still vulnerable.”
“The existing problems did not magically get resolved, the storage constraint is still there … We remain very cautious short term, but our view is that we will see a price recovery on the longer term,” Nysveen added.
For more market trends, visit ETF Trends.