Stock futures edge lower after weak economic, earnings data

Stock futures opened slightly lower Wednesday evening after a batch of historically weak economic data released earlier in the day revealed the extent of the damage the coronavirus pandemic was unleashing on the domestic economy.

Quarterly results from some of the country’s biggest financial institutions including Goldman Sachs, Bank of America and Citigroup also reflected steep drops in first-quarter earnings over last year, providing some of the first comprehensive looks at the coronavirus’s impact on corporate profitability.

The data so far this week has brought the devastation the coronavirus pandemic has inflicted on Wall Street to Main Street, and from the human impact to the economic, into even sharper relief.

March retail sales were shown on Wednesday to have dropped by a record margin as consumers – the key engine of U.S. economic activity – stayed in their homes and put off the bulk of discretionary purchases. This data, combined with other reports including one showing manufacturing output dropped by the most since 1946 in March, led at least one economist to assert that the U.S. economy is now “in free fall.”

The Federal Reserve’s April Beige Book, or collection of anecdotes about conditions across the regional Fed districts, affirmed the economic deterioration, noting that “economic activity contracted sharply and abruptly across all regions in the United States as a result of the COVID-19 pandemic.”

While pivotal to containing the spread of the coronavirus, social distancing measures have deeply undercut domestic economic activity, leaving the question of when businesses across the country will reopen hanging in balance. Though federal and states officials from New York to California said they are considering reopening plans as new coronavirus cases level off, no definite timelines for easing distancing standards have yet been established.

“As the U.S. looks to begin the slow process of opening up the economy in May, a couple of conditions need to be met,” Neil Dutta, head of economics at Renaissance Macro Research, wrote in a note Wednesday. “First, it needs to be clear that the health systems across the country have the capacity to deal with a rise in new coronavirus infections. Second, we need to be on the right side of the infection and death curves.”

“Third, testing capacity needs to be good,” he added. “It looks like the U.S. is on its way to achieving the first and second of these conditions but remains well short of the third. At the moment, the U.S. is conducting just over 1 million tests per week; the health experts say we need at least twice this amount before reopening safely.”

6:01 p.m. ET Wednesday: Stock futures open lower

Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:01 p.m. ET Wednesday

  • S&P 500 futures (ES=F): down 3.5 points, or -0.13% to 2,771.5

  • Dow futures (YM=F): down 37 points, or -0.16% to 23,354.00

  • Nasdaq futures (NQ=F): down 9.5 points, or -0.11% to 8,584.50

NEW YORK, NY – MARCH 12: A woman wearing a protective mask walks past the New York Stock Exchange on March 12, 2020. in New York City. The Dow Jones industrial average fell 2,352.60 points, a decrease of almost 10% and the largest since 1987. (Photo by Pablo Monsalve/VIEWpress/Corbis via Getty Images)

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