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Average Dow Jones Industrial futures fell slightly in overnight trading on Sunday as a growing number of Covid-19 cases continued to weigh on the markets.
Dow-related futures contracts fell 66 points, or 0.2%. The move indicated an opening drop of around 50 points. S&P 500 futures were down 0.1%, while Nasdaq 100 futures were up 0.1%.
“This week’s stock will be traded for blocking issues and rising cases, but could see a boost in early December as optimism grows about a short-term and temporary stimulus package,” said Shannon Saccocia. Chief Investment Officer of Boston Private. “Overall, the push and pull between tech and cyclical stocks will likely continue for the next two weeks and we could see some tough days with the release of economic data reflecting the deterioration in consumer spending we are currently experiencing.”
All three major averages ended Friday’s session lower, while the Dow and the S&P 500 also posted a loss for the week, falling 0.73% and 0.77% respectively for the first negative week on three. The Nasdaq Composite managed to achieve a 0.22% gain for the week, marking its second consecutive week of gains.
The move to the downside came as Covid-19 cases continue to rise, with the United States reporting a record high of more than 195,500 new cases on Friday. Public health officials have warned that Thanksgiving celebrations Thursday could further exacerbate the outbreak.
Friday’s jump brings the seven-day average of new cases to over 167,600, a nearly 20% increase from a week ago, according to a CNBC data analysis compiled by Johns Hopkins University. The seven-day average of new cases increased at least 5 percent week over week in 43 states and the District of Columbia, Hopkins data shows.
The spike has led to coronavirus-related restrictions in some places. On Thursday, California Governor Gavin Newsom instituted a “limited stay-at-home order” on most residents of the state, requiring nonessential work and meetings to cease between 10pm and 5am. The move followed New York City Mayor Bill de Blasio’s decision to shut down the nation’s largest school system amid an increase in cases.
Such measures “are likely to produce negative growth” in the first quarter, JPMorgan economists said Friday. The company lowered its first-quarter GDP forecast to a 1% contraction, the first on Wall Street to forecast negative GDP for the first quarter of 2021.
A disagreement between the Treasury Department and the Federal Reserve over continued funding for some of the emergency programs set up during the Covid-19 epidemic also weighed on the markets last week.
The sentiment has been kept in check, however, by positive developments in the treatment and prevention of Covid-19. On Saturday, the Food and Drug Administration granted an emergency use permit for Regeneron’s Covid-19 antibody treatment, the experimental therapy given to President Donald Trump, on Saturday. Meanwhile, on Friday Pfizer and BioNTech have applied for an emergency use authorization from the FDA for their coronavirus vaccine, which has a 95% efficacy rate.
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