Stock futures sank Sunday evening as investor jitters over rising coronavirus cases in key parts of the country stirred up an extension of last week’s pullback in equities.
Last week, stocks posted their first weekly loss in a month, with a steep selloff on Thursday comprising much of the weekly decline. The plunge, which came on the heels of a more than 40% run-up in the S&P 500 since March, came after new data showed rising coronavirus case and hospitalization counts in states that were among the first to reopen businesses, and after the Federal Reserve delivered a grim forecast for economic activity in the near-term.
Market participants continued to eye coronavirus cases across the country for signs of resurgences. New cases in the densely populated state of Florida grew faster than the past week’s average as of Sunday’s tally, according to Bloomberg data, and Washington State Department of Health issued a report warning of state-wide increases in the virus.
In New York, the daily coronavirus death toll came in at 23 as of Sunday, or the lowest since the pandemic began and well below the near 800 per day at the outbreak’s peak in early April. Governor Andrew Cuomo, however, flagged that more than 25,000 complaints had been filed over violations of social distancing standards, and Cuomo warned he would tighten restrictions if businesses and individuals did not comply with the phased reopening process.
Still, some analysts maintained that geographies that have been slower to reopen including the Northeast, were less at risk of a renewed flare-up in cases, given their more protracted original lockdowns.
“We are not worried that the renewed lockdowns we expect in parts of Arizona, Texas, the Carolinas, Arkansas, and perhaps others, will be required elsewhere,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note. “Far more people have been sick in the densely populated Northeast and Midwest than in most of the South, and lockdowns in major cities have been very long and painful.”
“Accordingly, we’re expecting people in the Northeast and Midwest to be much more cautious about maintaining social distancing, and to be more willing to wear masks in stores, on public transportation and at leisure facilities,” he added.
Meanwhile, White House economic director Larry Kudlow said during CNN’s “State of the Union” on Sunday downplayed economic concerns posed by potential new waves of the coronavirus, saying, “There’s a very good chance you are going to get the V-shaped recovery,” and asserting growth would pick back up in the second half of the year. The remarks contrasted with some of the more cautionary outlooks from officials including Federal Reserve Chair Jerome Powell, who last week underscored the ongoing uncertainty created by the pandemic.
Kudlow also said the current $600-per-week unemployment payment paid out to some Americans who had lost their jobs during the pandemic as part of Washington’s sweeping coronavirus relief plan would end on schedule at the end of July, calling the program “a disincentive” for people to return to work.
Later this week, market participants are poised to receive new economic data on the retail trade and manufacturing sectors, which many economists believe will affirm an at least slight pick-up in activity from the doldrums of April.
“While concerns escalated following updates on rising new coronavirus cases and the FOMC’s downgraded projections for the U.S. economy and labor market to rebound, incoming economic indicators released for May show material improvement and suggest that the worst of the downturn is behind us,” Sam Bullard, chief economist for Wells Fargo Economics, wrote in a note. “That improving performance is expected to continue this week when May retail sales, industrial production and the early June readings on regional manufacturing sentiment are published.”
6:07 p.m. ET Sunday: Stock futures drop more than 1%
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:07 p.m. ET:
S&P 500 futures (ES=F): 2,994.75, down 40 points or 1.32%
Dow futures (YM=F): 25,200.00, down 336 points, or 1.32%
Nasdaq futures (NQ=F): 9,542.75, down 102.25 points, or 1.06%
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