Traders are reassessing the current state of the market after the S&P 500 wiped out all of its 2020 losses on Monday, in a historic rally that shocked the Wall Street establishment. It took just 53 sessions for the index to restore the nearly $10T in value that was erased since an intraday low on March 23. The move may be warranted, especially after May's blowout jobs report, unprecedented stimulus and economy reopenings, but many are reviewing positions and looking for the next big catalyst. Ahead of a session that kicks off the Fed's latest two-day policy meeting, S&P 500 futures have pulled back, falling 1% in overnight trade.

Bull vs. Bear

Speculative excess has surged to the highest in at least two decades among U.S. options traders and not a single stock in the S&P 500 index is down for the past 10 weeks. It's either a coming sign that everything will fall together when the rally fades or an indication of broader optimism. "I don't think even the most optimistic bullish bull could have anticipated this," said David Sowerby, portfolio manager at Ancora Advisors in Cleveland. "The words that comes to mind are epic, monumental." Job openings data and small business optimism numbers are on deck for today, while Tiffany (NYSE:TIF), Chewy (NYSE:CHWY) and GameStop (NYSE:GME) report quarterly earnings.

Recession began in February

The peak in monthly economic activity in the U.S. occurred in February, according to the National Bureau of Economic Research - more or less the group that gets the honor of dating expansions and recessions. The expected duration of the downturn is a matter of debate and is likely to influence opinions on the need for additional economic relief. Congress has already provided $3.3T in emergency spending and tax breaks, prompting worries about a ballooning budget deficit.

Bankruptcy and financing

Shares of Chesapeake Energy (NYSE:CHK) tumbled 42% in extended trading on Monday following reports that the natural-gas producer was preparing to file for bankruptcy. The owner of Men's Wearhouse and Jos. A. Bank, Tailored Brands (NYSE:TLRD), also fell nearly 5% on similar reports. On the flip side, Macy's (NYSE:M) soared 13% AH upon securing $4.5B in new financing, while Hertz (NYSE:HTZ) erased all the losses suffered since the car rental company declared bankruptcy on May 22.

No active deal discussions

Following a weekend report that Gilead (NASDAQ:GILD) and AstraZeneca (NYSE:AZN) were in touch about a possible merger, CNBC's David Faber said there is nothing going on at the moment. Faber does acknowledge that "there may have been a conversation" at one point, but points out that AstraZeneca, as a U.K. company, would have been required to disclose that anything was going on per takeover panel regulations. The prior report did indicate that formal talks weren't yet underway and that advisers and others were being informally included in the process.

Facial recognition exit

"We believe now is the time to begin a national dialogue on whether and how facial recognition technology should be employed by domestic law enforcement agencies," IBM CEO Arvind Krishna told Congress, as the company shut down its facial recognition business. The unit did not generate significant revenue, according to CNBC, but the decision remains notable for a technology giant that counts the U.S. government as a major customer. "Technology can increase transparency and help police protect communities but must not promote discrimination or racial injustice."

$5B rescue package for Cathay Pacific

Governments across the globe have been aiding airlines amid a plunge in travel demand, and in some cases, like Germany's Lufthansa (OTCQX:DLAKY), they are taking direct equity stakes. Cathay Pacific Airways (OTCPK:CPCAY) is the latest to announce a recapitalization plan worth HK$39B ($5.03B) led by the Hong Kong government to help it weather the COVID-19 pandemic. According to the carrier, a plunge in passenger revenue to only 1% of the previous year's levels meant the airline had been losing cash at a rate of HK$2.5B-HK$3B per month since February.

Electric vehicle revolution

Shares of Nikola (NASDAQ:NKLA) are up another 14% premarket to $83 per share after a major run yesterday that saw the stock skyrocket more than 100%. The company went public this past Thursday - after a merger with VectoIQ - with the intention of disrupting the trucking industry, like Tesla (NASDAQ:TSLA) upended the car business. Shares of Tesla also hit a record closing price of $949.92 on Monday, partly in response to electric vehicle sales data out of China.

Start your engines

The IPO market is heating up as online car seller Vroom priced its initial public offering at $22/share, with the stock expected to start trading today on the Nasdaq under ticker "VRM." That's above even its recently increased price range of $18-20/share, and brings the raise to about $412.5M. Underwriters have received a 30-day greenshoe option to buy up to an additional 3,187,500 shares at the IPO price.

Movie theater reopenings

New industry guidance in California allows for theaters in the state to start reopening as soon as this weekend with strict measures. Cinemas will need to limit capacity to 25% or 100 people per auditorium (whichever is fewer) at first, though the rule is expected to be relaxed after two weeks. That would provide some ramp-up time before the planned arrival of the first big post-pandemic blockbuster, Tenet from Warner Bros. (NYSE:T) on July 17, followed by live-action Mulan from Disney (NYSE:DIS). Related tickers: AMC, CNK, IMAX, MCS, RDI, NCMI

Today's Markets

In Asia, Japan -0.4%. Hong Kong +1.1%. China +0.6%. India -1.2%.
In Europe, at midday, London -1.9%. Paris -2%. Frankfurt -2.1%.
Futures at 6:20, Dow -1.2%. S&P -1%. Nasdaq -0.6%. Crude -2.3% to $37.32. Gold +0.6% to $1715.10. Bitcoin -0.8% to $9670.
Ten-year Treasury Yield -6 bps to 0.82%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
10:00 Wholesale Trade
1:00 PM Results of $29B, 10-Year Note Auction