Thursday November 19th

19-11-2020

Dow futures extend losses following Wednesday’s sell-off

U.S. stock index futures traded slightly lower early Thursday on the heels of a market slide a day earlier as a recent rally lost steam. Futures tied to the Dow Jones Industrial Average slipped 62 points, or 0.2%. S&P 500 and Nasdaq 100 futures fell 0.1% and 0.3%, respectively. Futures were off their lows, however, after the release of preliminary data showed University of Oxford and AstraZeneca’s vaccine candidate triggered a similar immune response among all adults. Weakness in the futures follows a Wednesday session that finished on a sour note. After bouncing around the flat line for most of the day, the Dow Jones Industrial Average turned south in the final hour of trading to register a loss of 345 points, or 1.2%. The S&P 500 also dropped 1.2%, while the Nasdaq Composite shed 0.8%. The slide for stocks accompanied mixed news about the coronavirus crisis. On Wednesday morning, Pfizer announced that a final analysis showed that its vaccine candidate was 95% effective against Covid-19. However, New York City announced during the afternoon that it was closing schools due to a rising positivity rate. “This is the perfect day that describes what we’re calling the ‘Covid air pocket.’ We have a linearity issue, which is that you can’t get there from here without going through a lot of bad news and some slowdown in the real economy,” Alicia Levine, chief strategist at BNY Investment Management, said on Thursday’s “Closing Bell.” Despite Wednesday’s struggle, Wall Street has still seen a strong November. The S&P 500 has gained 9.1% month to date, while the small-cap Russell 2000 hit an intraday record high on Wednesday. The strength for small caps has been part of an outperformance for cyclical stocks in recent weeks after growth-oriented tech stock fueled much of the market’s rally from its March lows. “You see the market really kind of wanting to move in one direction, and then I think the vaccine news was certainly a catalyst to accelerate that a little bit. So I wouldn’t be surprised to see that trade persist for some time,” Jeff Mills, chief investment officer at Bryn Mawr Trust, said about the rotation into cyclical names. “That being said, I do think the leadership in the market could be volatile over the next couple of months because you’re going to be battling Covid case increases and incrementally better news relative to the vaccine,” Mills continued. Thursday morning will bring another look at how the labor market recovery is faring amid rising cases of Covid-19. Economists surveyed by Dow Jones expect the reading for initial jobless claims to come in at 710,000, roughly flat compared with the prior week. Asia-Pacific markets retraced some losses on Thursday to trade mixed as traders grappled with optimism around a potential coronavirus vaccine and economic worries. Japan’s Nikkei 225 declined 0.36% to 25,634.34 while the Topix index rose 0.33% to 1,726.41. In South Korea, the Kospi index erased earlier losses to rise fractionally to 2,547.42. Chinese mainland shares reversed course to erase earlier losses: The Shanghai composite was up 0.47% to 3,363.09, Shenzhen composite rose 0.63% to 2,275.84 and the Shenzhen component advanced 0.87% to 13,777.45. Elsewhere, in Hong Kong, the Hang Seng index dropped 0.46% in afternoon trade. Oil futures eased on Thursday, surrendering some gains from the previous day as the surge in coronavirus cases and tighter economic restrictions around the globe stoked fears over slower fuel demand, outweighing upbeat vaccine news. Brent crude futures shed 25 cents, or 0.56%, to $44.10 a barrel, after gaining 1.4% on the previous day. U.S. West Texas Intermediate crude declined 44 cents, or 1%, to $41.38 a barrel, having risen nearly 1% on Wednesday. Gold fell to a one-week low on Thursday as the dollar regained momentum and optimism that progress on vaccine development would hasten economic recovery eroded bullion’s safe-haven appeal. Spot gold fell 0.6% to $1,859.38 per ounce, having earlier hit its lowest since Nov. 9 at $1,854.60. U.S. gold futures slipped 0.9% to $1,857.60.