Stock futures edge lower after Tuesday’s late-day drop

Stock futures were little changed Tuesday evening after a choppy day of trading during the regular session.

At the session highs on Tuesday, the blue-chip index rallied a total of more than 22% above its March 23 closing low, or 3.5% on the day, before ending the session slightly in the red.

Investors this week have been tracking mixed to slightly more positive developments in the coronavirus outbreak, with hotspots including New York and Italy showing improving trends in new cases and hospitalizations, even as new deaths for the Empire State rose by the largest number since the outbreak began.

Politicians in other virus-stricken regions were less upbeat, however, with the France’s health minister warning Tuesday the country had not yet hit its peak in the outbreak.

Improving coronavirus case data and momentary risk rally aside, many analysts maintain that it would be premature to assume volatility will calm in the markets in the very near-term.

“It is way too soon to signal an all-clear for the markets.,” Neil Dutta, head of economics at Renaissance Macro Research, said in an email Tuesday. “First, as the news on the health front gets better, the news on the economic front will likely get much worse.”

Eight out of 10 U.S. counties are under some form of lockdown order amid the pandemic, according to a recent Wall Street Journal/Moody’s Analytics study, with the bulk of those seeing billions of dollars worth of lost output daily as businesses stay shuttered. And the impact of these shutdowns will soon be reflected in economic reports released in the coming weeks.

“April’s economic data will be a tough pill to swallow with monthly GDP [gross domestic product] likely contracting 50% at an annual rate,” Dutta said. “Next week, we get March retail sales and a couple of regional PMIs for April.”

He added that when social distancing measures do eventually ease, ultimately, “‘opening up’ the economy sounds much easier in theory than it will be in practice.

“It is not a switch, but a process,” he said.

Still, other prominent investors noted that the time of extreme panic may be in the past at this point, creating an opportunity for less drastically defensive positioning for market participants.

“Investors who favored defense over offense have experienced smaller losses this year, have the satisfaction that comes from relative outperformance, and are able to spend more of their time looking for bargains than dealing with legacy problems,” Howard Marks, co-founder and co-chairman of Oaktree Capital Management, wrote in a letter to clients Tuesday. “Thus, I feel it’s a time when previously cautious investors can reduce their overemphasis on defense and begin to move toward a more neutral position or even toward offense (depending on how sure they want to be of grasping early opportunities.”

“I’m not saying the outlook is positive,” he added. “I’m saying conditions have changed such that caution is no longer as imperative.”

6:01 p.m. ET Tuesday: Stock futures open roughly flat

Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:02 p.m. ET on Tuesday:

The empty Trading Floor of the NYSE after the market has closed.

  • S&P 500 futures (ES=F): down 1.25 points, or 0.05% to 2,640.75

  • Dow futures (YM=F): down 18 points, or 0.08% to 22,473.00

  • Nasdaq futures (NQ=F): down 5.75 points, or 0.07% to 8,006.25

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