Thursday June 25th

25-06-2020

Stock futures drop on continuing virus concern, jump in jobless claims

U.S. stock index futures were under pressure again on Thursday following the release of disappointing unemployment data while traders grappled with a rising number of coronavirus cases. Futures on the Dow Jones Industrial Average dropped 174 points, or 0.7%. S&P 500 futures slid 0.6% and Nasdaq-100 futures lost 0.1%. An additional 1.48 million Americans filed for unemployment benefits last week, the Labor Department said. Economists polled by Dow Jones expected a print of 1.35 million. This marks the second straight week that U.S. jobless claims data were worse than expected. Futures fell to their morning lows after the data were released. However, they quickly recovered from those levels as continuing claims fell by more than 700,000 last week. More than 45,000 new coronavirus cases were confirmed on Wednesday, a record that surpassed the previous April 26 peak by over 9,000 cases, according to an NBC News tally. States such as Texas, Florida, California and Arizona have all seen major spikes. New York, New Jersey and Connecticut also ordered visitors from certain hotspot states to quarantine for 14 days. This resurgence led Apple to re-close some stores in Houston, where intensive-care unit beds are near capacity. It also prompted Disney to delay the reopening of its California-based parks beyond July 17. Shares of companies that would benefit from the economy reopening were under pressure in early trading. Airlines such as American, Delta and United all fell more than 4%. Norwegian Cruise Line slid 8.5%. The negative headlines sent the market into a downward spiral on Wednesday. The Dow dropped about 700 points, while the S&P 500 and the Nasdaq fell 2.5% and 2.1%, respectively. All three benchmarks posted their worst day since June 11. The tech-heavy Nasdaq also snapped an eight-day winning streak. “The market has been optimistic that the economy is re-opening and that life would get somewhat back to normal, but the virus may have other ideas,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said in an email. “The market has again gotten caught up in the crossfire of increasing numbers of Covid-19 cases, trade protectionism and politics.” The Trump administration is considering new tariffs on $3.1 billion exports from France, Germany, Spain and the U.K., according to a notice from the U.S. Trade Representative released Tuesday evening. The new duties on olives, beer, gin and trucks can be up to 100%. Stocks in Asia Pacific dropped on Thursday after the International Monetary Fund slashed its economic forecasts again. South Korea’s Kospi also saw a substantial decline as it dropped 2.27% to end its trading day at 2,112.37. In Japan, the Nikkei 225 slipped 1.22% to close at 22,259.79 while the Topix index shed 1.18% on the day to 1,561.85. Oil prices slipped on Thursday, extending losses of more than 5% in the previous session, weighed down by record high U.S. crude inventories and worries that a rapid resurgence in Covid-19 cases could choke a revival in fuel demand. U.S. West Texas Intermediate (WTI) crude futures fell 57 cents, or 1.5%, to $37.43 per barrel on Thursday, after dropping $2.36 on Wednesday. Brent crude futures fell 43 cents, or 1.07%, to $39.88 per barrel after falling $2.32 on Wednesday. A day earlier, the benchmark contract hit its highest price since early March, just before pandemic lockdowns and a Saudi-Russian price war slammed markets. Gold held firm on Thursday, after hitting a nearly eight-year high in the last session, as an upsurge in global coronavirus cases drove safe-haven buying. Spot gold was up 0.3% at $1,765.94 per ounce, in sight of the peak of $1,779.06 reached on Wednesday, which was its highest since October 2012. U.S. gold futures rose 0.1% to $1,777.20.