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U.S. Stocks May Regain Ground After Biden's Big Night

wallstreet aug14 04mar20 lt

Following the sharp pullback seen in the previous session, stocks are likely to move back to the upside in early trading on Wednesday. The major index futures are currently pointing to a substantially higher open for the markets, with the Dow futures up by 597 points.

Early buying interest may be generated in reaction to the results of the Super Tuesday primaries in the race for the Democratic presidential nomination.

Former Vice President Joe Biden performed much better than expected in yesterday's contests, including an upset victory over Senator Bernie Sanders in delegate-rich Texas.

Sanders earned a significant chunk of delegates by winning California, but Biden pulled off big victories in a number of smaller states such as North Carolina, Virginia and Minnesota.

The results of yesterday's contests would appear to set up a head-to-head matchup between the very liberal Sanders and the more moderate Biden.

Health insurers such as Anthem (ANTM), UnitedHealth (UNH) and Cigna (CI) are seeing substantial pre-market strength in reaction to Biden's strong night.

Biden has called for expanding the healthcare reform law known as Obamacare rather than scrapping private insurance in favor of a Medicare-for-all plan, as Sanders has proposed.

While either Democratic candidate is expected to face a tough fight against President Donald Trump, Biden is seen as likely to be a much more pro-business president than Sanders.

Senator Elizabeth Warren's poor performance in yesterday's contests may also be generating some positive sentiment, as she is particularly disliked by many on Wall Street.

In U.S. economic news, payroll processor ADP released a report showing private sector employment increased by more than expected in the month of February, although the report also showed a notable downward revision to the surge in jobs in the previous month.

ADP said private sector employment climbed by 183,000 jobs in February after jumping by a downwardly revised 209,000 jobs in January.

Economists had expected employment to rise by about 170,000 jobs compared to the spike of 291,000 jobs originally reported for the previous month.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on activity in the service sector in the month of February.

The ISM's non-manufacturing index is expected to slip to 54.9 in February after rising to 55.5 in January, although a reading above 50 would still indicate growth in service sector activity.

Later in the day, the Federal Reserve is scheduled to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

After seeing considerable volatility early in the session, stocks moved sharply lower over the course of the trading day on Tuesday. With the pullback on the day, the major averages partly offset the strong gains posted on Monday.

The major averages finished the day firmly in negative territory but off their lows of the session. The Dow tumbled 785.91 points or 2.9 percent to 25,917.41, the Nasdaq plunged 268.07 points or 3 percent to 8,684.09 and the S&P 500 slumped 86.86 points or 2.8 percent to 3,003.37.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets have all moved sharply higher on the day. While the U.K.'s FTSE 100 Index has jumped by 1.5 percent, the French CAC 40 Index and the German DAX Index are both up by 1.3 percent.

In commodities trading, crude oil futures are climbing $0.80 to $47.98 a barrel after rising $0.43 to $47.18 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,639, down $5.40 compared to the previous session's close of $1,644.40. On Tuesday, gold spiked $49.60.

On the currency front, the U.S. dollar is trading at 107.56 yen compared to the 107.13 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1122 compared to yesterday's $1.1173.

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