US stock futures surged higher early Monday morning as investors prepared for the first day of trading in May.
Dow futures rose 210 points. S&P 500 futures gained 0.5% and Nasdaq 100 futures gained 0.3%.
Berkshire Hathaway shares rose 1% in early trading after the Warren Buffett conglomerate posted a 20% increase in operating income and continued to buy back large quantities of its own shares. Buffett also announced to CNBC that Greg Abel, vice chairman of all non-insurance-related operations, will succeed him when he is no longer responsible.
Economic reopening bets won early trading. The holdings of Norwegian Cruise Line and Carnival Corp. were both 1% higher in the pre-market. Caterpillar and Bank of America were also higher.
Verizon’s shares rose 0.6% in premarket trading after the telecommunications giant announced it was selling its media group to private equity firm Apollo Global Management for $ 5 billion. The sale will allow Verizon to outsource real estate from the previous Internet empires of AOL and Yahoo.
Some tech stocks like Tesla and Netflix were weak in early trading.
Monday marks the first trading day in May. Despite Friday’s stock weakness, the S&P 500 made its third straight month of earnings in April, adding more than 5% to the index as investors looked to a strong post-pandemic economic rebound and earnings.
The S&P 500 rose 11% over the course of the year. The benchmark closed on Thursday after the results from Apple and Facebook at a record level.
The Dow was up 2.7% last month while the Nasdaq Composite was up 5.4% in April.
Some investors expect weakness in the new month on the old Wall Street saying “sell in May and walk away”. This mantra is to reduce risk from May to October, a time when the market is historically more likely to sell off.
Data from 1928 shows the May through October period has the lowest average and median returns of any six months of the year, with the S&P 500 66% of the time at an average return of 2.2%, according to the Bank of America grew.
The market could see mediocre performance from here, particularly after a massive rally from November to April that saw the S&P 500 gain 28%, the bank noted.
“This is a small number of observations, but May-October has poor average and median values after rallying November-April of at least 20%,” Stephen Suttmeier, technical research strategist at Bank of America, said in one Note.
April manufacturing PMI data is released on Monday at 9:45 a.m. ET, followed by ISM manufacturing at 10 a.m.
The April job report will be published on Friday.
“Investors are preparing for another busy week of earnings that ends with a widely watched job report. Given the positive economic and earnings news, the path of least resistance seems higher,” said Jack Ablin, chief investment officer at Cresset Capital CNBC.
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