Dow futures tumble nearly 900 points as U.S. coronavirus cases rise, after Fed’s grim economic outlook

U.S. stock-index futures swooned Thursday as investors worried about coronavirus cases rising again and digested Wednesday’s downbeat economic outlook from the Federal Reserve.

The market moves came even as the number of Americans filing for jobless benefits for the first time continued to decline in the most recent week.

How are benchmarks performing?

Futures for the Dow Jones Industrial Average US:YM00 US:YMM20 were off 859 points, or 3.2%, at 26,102, those for the S&P 500 index US:ES00 US:ESM20 were down 83.50 points, or 2.6%, at 3,103, while Nasdaq-100 futures US:NQ00 US:NQM20 gave up 173.75 points, or 1.7%, at 9,914.

On Wednesday, the Dow US:DJIA fell 282.31 points, or 1%, to end at 26,989.99. The S&P 500 US:SPX shed 17.04 points, or 0.5%, finishing at 3,190.14. The Nasdaq Composite US:COMP climbed 66.59 points, or 0.7%, to close at a record 10,020.35 high.

While both the S&P 500 and the Dow are up about 45% from the low in late March, the S&P 500 is down 1.2% this year and the Dow is down 5.4% for 2020, though the Nasdaq Composite rose for eight days in the past nine sessions, bringing its 2020 gains to nearly 10%.

What’s driving the market?

The number of U.S. coronavirus infections passed the two million mark and over 112,000 Americans have died, according to Johns Hopkins University. Despite fewer cases being recorded in some cities and states, the seven-day average of new cases over the last two weeks is still rising in more than 20 states, leading investors to worry about a second wave of the epidemic just as business activity is resuming.

President Trump announced he will resume holding election rallies with the first in Tulsa, Oklahoma on June 19th but he is not expected to require that attendees practise social distancing.

The global case tally for the coronavirus climbed to 7.39 million on Thursday, according to data The death toll rose to 417,022.

“Up until yesterday financial markets didn’t appear overly concerned about the prospect of a second wave,” said Michael Hewson, chief market analyst at CMC Markets UK, in a Thursday research note. However, he noted that the “prospects, appear to have concentrated minds in the wake of recent gains, and sending the usual suspects of travel, as well as oil and gas stocks sharply lower”

Meanwhile, on Wednesday the Fed’s updated policy statement and projections indicate that it expects a 6.5% contraction by the end of the year on a year-over-year basis, with the unemployment rate ending at 9.3%, well above the Fed’s estimate of the long-run rate forecast of 4.1%.

Naeem Aslam, chief market analyst at AvaTrade, in a Thursday research note said that “lack of Fed’s confidence in the US economic recovery is also impacting the S&P500 futures and the risk-on sentiment.”

A RECAP OF THE FED: Fed provides update on economic outlook and policy thinking

In U.S. economic data Thursday, another 1.54 million Americans filed for initial jobless claims, the government said. That beat expectations for 1.565 million people seeking unemployment benefits, according to average estimates of economists surveyed by Econoday.

Although new jobless claims have been falling since March, more than 2.2 million applications for unemployment compensation were filed in the last week of May through state and federal relief programs. That is almost as many as the 2.5 million jobs regained by the economy in the entire month.

Looking ahead, investors also will watch an update on the Fed’s balance sheet, which hit $7.21 trillion last week, and the money supply at 4:30 p.m. Eastern.

Which stocks are in focus?

• Children’s Place Inc. US:PLCE shares were 4% lower in premarket action after reporting results that missed analyst expectations and said it plans to shutter hundreds of stores.
• Shares of Oneok Inc. US:OKE tumbled 13.1% in premarket trading Thursday, after the natural gas services company announced a public offering of 26 million shares of common stock.
• Smith & Wesson Brands Inc. US:SWBI shares were 1% lower before the bell on Thursday even after a Wedbush analyst more than doubled his price target, to $18 from $8.50.
• Shares of United Airlines US:UAL , Delta US:DAL , and American Airlines US:AAL all dropped more than 10% in premarket trading.

How are other assets faring?

Oil prices traded lower on Thursday, as the Fed promised to keep rates near zero. West Texas Intermediate US:CLN20 lost $1.99 cents, or 5%, trading at $37.61 a barrel on the New York Mercantile Exchange.

The greenback picked up 0.5% against its major rivals, as gauged by the ICE U.S. Dollar index US:DXY.

In precious metals, August gold US:GCM20 on Comex gained $12.70, or 0.7%, at $1,726.00 an ounce.

The 10-year Treasury note yield BX:TMUBMUSD10Y fell about 5 basis points to 0.698%. Bond prices move in the opposite direction of yields.

In global equities, the Stoxx Europe 600 index XX:SXXP was down 0.4%, while the FTSE 100 index UK:UKX shed 0.1%.

In Asia, Japan’s Nikkei JP:NIK tumbled 2.2% higher, the FTSE 100 index UK:UKX declined 1.1%. China CSI 300 XX:000300 finished up 1.1% lower and Hong Kong’s Hang Seng Index HK:HSI closed off 2.3%. South Korea’s Kospi index KR:180721 retreated 0.9%. #DOW##Fed##CoronavirusOutbreak##US#

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