Tuesday December 8th

8-12-2020

Stock futures fall as traders weigh stimulus prospects and surging Covid cases

U.S. stock index futures fell early Tuesday as traders kept an eye on negotiations for additional fiscal stimulus while the U.S. coronavirus caseload continues to rise. Dow Jones Industrial Average futures implied an opening loss of about 90 points. S&P 500 futures and Nasdaq 100 futures were also lower. Shares of Tesla declined from a record after the electric vehicle maker said it would sell up to $5 billion in stock. Republican and Democratic leaders said Monday that Congress is trying to extend government funding for an additional week to try and strike a deal on new Covid-19 aid. The news came after a bipartisan group of senators unveiled a $908 billion stimulus proposal last week. “News out of DC that fiscal stimulus talks have resumed is also a positive development (though until a deal actually passes the President’s desk, this might be all hat, no cattle),” wrote Willie Delwiche, investment strategist at Baird. “These headlines come at a critical time as we remain in a challenging time from both a health and economic perspective.” Calls for a new aid bill being pushed through before year-end have grown recently as U.S. employment growth continues to slow down and the number of Covid-19 cases keeps rising. More than 14.8 million coronavirus cases have been confirmed in the U.S., according to data from Johns Hopkins University. The country’s daily infection rate, as a seven-day average, is also at an all-time high. This latest spike in Covid-19 cases has led several states and cities to reimpose stricter social-distancing measures. New York Gov. Andrew Cuomo said Monday that New York City could lose indoor dining next week, adding that more severe restrictions would be imposed if hospitals reach a critical point. “You can’t overwhelm the hospital system,” Cuomo said. “Overwhelming the hospital system means people die on a gurney in a hallway.” The increase in Covid infections, coupled with the uncertainty around additional fiscal aid, knocked the Dow and S&P 500 off record levels on Monday. The Dow slid nearly 150 points, or 0.5%. The S&P 500 pulled back by 0.2%. However, the Nasdaq Composite rose 0.5% to a fresh record as traders sold value stocks in favor of high-flying growth names. The iShares Russell 1000 Value ETF (IWD) dipped 0.6%. Its growth counterpart, the iShares Russell 1000 Growth ETF (IWF) advanced 0.4%. Asia-Pacific markets traded mixed on Tuesday as investors remained cautious over rising coronavirus cases, U.S. stimulus negotiations as well as Brexit talks between the U.K. and the European Union. Japan’s Nikkei 225 fell 0.3% to 26,467.08 while the Topix index was down 0.11% at 1,758.81. In South Korea, the Kospi declined 1.62% to 2,700.93 as the number of daily reported cases of Covid-19 remains high. In Hong Kong, the Hang Seng index fell 0.72% in late-afternoon trade. Chinese mainland shares were mostly lower: The Shanghai composite fell 0.19% to 3,410.18 while the Shenzhen composite and the Shenzhen component finished near flat. Oil prices fell on Tuesday, adding to losses from the previous session that came as California tightened its pandemic lockdown through Christmas and coronavirus cases continued to surge in the United States and Europe. Brent crude futures fell 21 cents, or 0.4%, to $48.58 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 24 cents or 0.5%, to $45.52 a barrel. Both benchmark contracts lost around 1% on Monday. Gold prices hit a two-week high on Tuesday, as investors remained hopeful of further U.S. stimulus measures to counter the economic fallout of a surge in coronavirus cases. Spot gold rose 0.2% to $1,867.66 per ounce by 0314 GMT. It rose to $1,869.06, its highest since Nov. 23, earlier in the session. U.S. gold futures were up 0.3% at $1,871.70.