Tuesday April 13th

13-04-2021

Dow futures fall more than 100 points after FDA recommends pausing J&J Covid vaccine

U.S. stock index futures dropped in a sudden move after the U.S. Food and Drug Administration said it’s recommending a pause in the Johnson & Johnson Covid vaccine after reported cases of blood clotting. Futures tied to the Dow Jones Industrial Average were down 120 points. Meanwhile, those for the S&P 500 were off by 0.3%. Nasdaq 100 futures traded flat. J&J shares fell 3% in premarket trading. “We are recommending a pause in the use of this vaccine out of an abundance of caution,” the FDA said in a statement on Twitter. There have been six reported cases of a rare and severe type of blood clot after receiving the J&J vaccine, the FDA said. More than 6.8 million doses of the J&J vaccine have been administered in the U.S. The agency is calling for a pause in the vaccine until Centers for Disease Control and Prevention concludes its investigation into these cases. “Until that process is complete, we are recommending this pause,” the FDA said. “This is important to ensure that the health care provider community is aware of the potential for these adverse events and can plan due to the unique treatment required with this type of blood clot.” Shares that stand to be hurt the most if the rapid vaccine rollout in the U.S. slows also fell in premarket trading. Carnival Corp shares pulled back 2%. American Airlines also lost more than 2%. Shares of Moderna jumped 7% in premarket trading following the J&J news. “I don’t think there’s going to be a huge reaction in the market beyond the knee-jerk reaction we’re getting here right now,” said Mike Wilson, chief U.S. equity strategist for Morgan Stanley, on CNBC’s “Squawk Box.” “We’re optimistic, very optimistic that we’re going to be reopened fully in the second half of this year.” Stock futures were mostly flat early Tuesday morning before the J&J news, first reported by the New York Times, came out. Investors are waiting for a highly anticipated inflation report set for release before Tuesday’s opening bell on Wall Street. The March reading for the consumer price index is scheduled to be released at 8:30 a.m. ET. Economists polled by Dow Jones are projecting the headline index to rise by 0.5% month-over-month and 2.5% year-over-year. Government officials, including Federal Reserve Chair Jerome Powell on Sunday and Biden administration economists on Monday, stressed that while they expect a jump in inflation in the months ahead, the change could prove temporary due to comparisons with last year’s pandemic lockdowns and extra consumer spending from stimulus checks and pent-up demand. Private sector strategists and economists also said that the reading may not be a true gauge of rising prices. “We will soon see impact from the 2020 Covid-19 pandemic on the economic data. A particular focus area will be inflation. Our message is simple: Don’t fall prey to this head fake,” Putnam Investments said in a note on Monday. Fed officials said they are willing to let inflation run hot for a period of time without changing their accommodative policy stance, including asset purchases and a benchmark interest near zero. Markets were quiet on Monday, with the three major indexes pulling back slightly. The S&P 500 finished just a hair under its previous record close, while the Dow slipped 55 points. The Nasdaq Composite was the laggard, shedding 0.4%. The bond market was also subdued on Monday, with the 10-year Treasury yield edging slightly higher to trade near 1.67%. Yields move inversely to prices. The market has been calm over the past week as Wall Street settled into a lull ahead of the first-quarter earnings season. Corporate news is set to pick up later in the week, with JPMorgan Chase, Goldman Sachs and Delta Air Lines among the companies set to report quarterly results. Shares in Asia-Pacific were mixed on Tuesday, with South Korea leading major markets regionally. By Tuesday’s close, the Kospi in South Korea was 1.07% higher, at 3,169.08. In Japan, the Nikkei 225 rose 0.72% to close at 29,751.61 while the Topix index gained 0.2% to finish the trading day at 1,958.55. Mainland Chinese stocks closed mixed. The Shanghai composite shed 0.48% to 3,396.47 while the Shenzhen component rose 0.242% to 13,528.31. The Hang Seng index in Hong Kong climbed 0.15% to close at 28,497.25. Oil prices edged higher on Tuesday on tensions in the Middle East after the Yemen-based Houthi movement said it fired missiles on Saudi oil sites and on an expected drawdown in crude oil inventory in the United States. Still, crude prices have remained rangebound in the past three weeks, as growing expectations of surging economic activity in the U.S. and China are balanced by the slow rate of vaccinations in Europe and anticipation of additional supply of oil from Iran in the coming months. Brent crude oil futures was up 9 cents, or 0.1%, at $63.37 a barrel by 0055 GMT while U.S. crude oil futures gained 11 cents, or 0.2%, to $59.81 a barrel. Gold prices fell to their lowest in more than a week on Tuesday after the metal’s appeal was dented by higher Treasury yields and as investors awaited U.S. inflation data. Spot gold was 0.2% lower at $1,729 per ounce, having earlier dipped to its lowest since April 5 at $1,722.67. U.S. gold futures eased 0.2% at $1,729.70.