Dow futures drop greater than 200 factors as new virus restrictions increase restoration considerations
Stock futures fell in night trading Thursday as rising new coronavirus cases cast doubt on a rapid economic recovery.
The futures on the Dow Jones Industrial Average fell 220 points, down more than 200 points when it opened on Friday. S&P 500 futures were down 0.7% and Nasdaq 100 futures were down 0.3%.
The overnight action followed slight gains on Wall Street, led by technology stocks on Thursday. The Dow gained 40 points, while the S&P 500 and Nasdaq gained 0.4% and 0.9%, respectively. It was the first positive day in three for the major averages.
The record market rally has slowed in the past few days as more immediate concerns about the worsening pandemic overshadowed optimism about a viable vaccine.
According to a CNBC analysis of John Hopkins data, the 7-day average of daily new infections with Covid-19 in the US is now 161,165, 26% higher than a week ago. Many states have rolled back their reopening plans and introduced new restrictions to contain the spread.
California Governor Gavin Newsom on Thursday issued a “limited residency permit” for the majority of the state’s residents, requiring unnecessary work and gatherings to stop between 10 p.m. and 5 a.m. Meanwhile, the Centers for Disease Control and Prevention advised Americans against traveling for Thanksgiving Day.
“The market is moving a bit as investors digest the recent ramp higher and grapple with a worsening Covid-19 spread,” Tony Dwyer, Canaccord Genuity’s chief market strategist, said in a note.
President-elect Joe Biden said Thursday he would not order a national shutdown as the country goes into a tough holiday season, calling the measure “counterproductive”.
The mood improved slightly on Thursday after there were signs that lawmakers would resume talks on a new Covid-19 aid law in the face of the worsening pandemic. Senator Chuck Schumer, DN.Y., said Thursday that Senate Majority Leader Mitch McConnell, R-Ky., Has agreed to resume negotiations.
The Treasury Department is trying to end a handful of the Federal Reserve’s emergency credit facilities that will expire in late 2020, and is pulling the central bank back saying the programs continue to play an important role in supporting the fragile economy.
However, some on Wall Street believe that after the short-term turmoil, the market will see a sustained recovery as the global economy recovers from the recession.
“The backdrop of historical money availability and the ongoing global economic recovery suggest that any weakness should provide an opportunity to strengthen the theme of the global economic recovery, which favors small-cap stocks, economically sensitive sectors, emerging markets and commodities To the fore, “said Dwyer.
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