Benchmarks for US equities fell sharply lower on Friday morning, with major indices poised to end the week’s losses as investors analyzed a record surge in new coronavirus cases and the implications of Federal Reserve Bank stress test results announced Thursday night.
How are the benchmarks working?
The Dow Jones Industrial Average DJIA,
it traded 315 points, or 1.2%, lower by approximately 25,446; the S&P 500 SPX index,
it fell 24 points, or 0.8%, to 3,060; while the Nasdaq COMP composite index,
It lost 81 points to reach 9,935, a decrease of about 0.8%.
During the week, the Dow and S&P 500 saw weekly losses of 0.5%, while the Nasdaq was on track to advance 0.7% for the period, as of Thursday’s close.
What is driving the market?
Stock market investors have struggled with rising daily rates of new coronavirus cases in the United States throughout the week, while noting a slow improvement in economic data, prompting the stock market to reflect expectations of an economic recovery in the form of V.
On Thursday, the US states saw a record single-day increase of 37,000 in infections, led by Florida, Texas, California and Arizona, surpassing the 36,188 level since April 24, according to data analysis from Bloomberg, compiled by Johns Hopkins University.
Overall, the total number of cases in the US has exceeded 2.4 million and that increase, especially in the southern and western states of the US, and has caused governors to halt reopening plans. Business in Texas, North Carolina, Louisiana and Kansas. However, governors in New York, New Jersey and Connecticut are proceeding with the reopening efforts but imposing a 14-day quarantine for visitors coming from some southern states.
Investors are also assimilating the results of the Federal Reserve’s annual bank stress tests that require banks to preserve capital by suspending share buybacks and dividend payments in the third quarter based on the average net income of the past four quarters.
However, financial institutions got a boost Thursday after the Federal Deposit Insurance Commission and the Office of the Comptroller of the Currency said they plan to loosen the restrictions imposed by the Volcker rule and allow banks to more easily make large investments. in venture capital and the like. funds, among other rule reversals.
Take a look at MarketWatch’s Need to Know column:Why is a strategist really encouraged by the latest coronavirus data showing a spike in new cases?
In Europe, Christine Lagarde, President of the European Central Bank, said that the worst of the COVID-19 pandemic could have happened. “We have probably passed the low point and I am saying this with some concern because of course there could be a second wave,” he said during a summit on Friday. However, Lagarde warned that part of the economy could be permanently affected.
After a 8.7% contraction in gross domestic product by 2020, the ECB estimates economic growth of 5.2% in 2021 and 3.3% in 2022.
In US economic reports, consumer spending rose in May to a record 8.2% after falling in April, as consumers, who account for two-thirds of economic demand, used stimulus controls provided by the government to help Americans deal with job losses during the pandemic. However, personal income declined, according to the report. However, the increase in spending fell short of the 10% forecast by economists surveyed by MarketWatch, and revenue fell 4.2% last month, reflecting massive unemployment and the decline in federal aid.
“Consumer demand is likely to look good in June as well, underpinned by the reopening in the Northeast and a still high savings rate,” wrote Jefferies analysts Aneta Markowska and Thomas Simons. “However, stimulus payments are now shrinking and dragging down overall revenue growth,” he wrote.
A final reading on consumer sentiment for the University of Michigan for June is due at 10 am, with estimates for a reading of 78.9.
What actions are in focus?
- Nike Inc. NKE
-4.47%
it dipped to a loss in the fourth quarter and total sales fell 38% despite a jump in online sales. Online sales for the quarter increased 75% with “strong double-digit increases” across all geographies and accounted for approximately one third of total revenue for the quarter. - Amazon.com Inc. AMZN
+ 0.27%
announced it was purchase of Zoox driverless car company for more than $ 1 billion, according to reports. - Actions of Gap Inc. GPS,
+ 36.56%
They were in focus after the retailer reported that it was partnering with hip-hop star Kanye West. - Vaxart Inc. VXRT,
+ 86.02%
He said Friday that his COVID-19 oral vaccine has been selected to participate in a non-human primate challenge study funded by the US government’s Operation Warp Speed program, which aims to accelerate the development of a vaccine. - Microsoft Corp. MSFT
-1.04%
He said Friday that he will close all of his physical stores, as part of the new focus of the software retailer and cloud giant. - Actions of Inovio Pharmaceuticals Inc. INO
-14.88%
It recovered 7.5% on Friday, to extend its recent rocket trip to a maximum of 20 years, even as the biotech company was downgraded in Stifel Nicolaus over valuation concerns. - Albertsons Companies Inc. ACI
He set the price of his initial public offering at $ 16 a share on Thursday afternoon, lower than the price range he was looking for. The supermarket will sell 50 million shares, also below expectations, as it sought to sell 65.8 million shares in a range between $ 18 and $ 20 per share, according to a document.
How are other assets working?
West Texas US Intermediate Crude CLQ20,
fell 47 cents, or 1.1%, to $ 38.25 a barrel on the New York Mercantile Exchange. In precious metals, GCM20 gold futures,
it was around $ 1.10, or 0.1%, lower at $ 1,769.90 an ounce.
The 10-year Treasury note yields TMUBMUSD10Y,
It fell 1.3 basis points to 0.66% amid inflows to safe haven assets. Bond prices move inversely to yields.
The dollar remained virtually unchanged against a basket of its main rivals, based on trading in the ICE US Dollar index. DXY
In global equities, the Stoxx Europe 600 SXXP Index,
gained 1.1% and the FTSE 100 UKX London,
up 1.5%.
In the Asian markets, the Japanese Nikkei NIK,
gained 1.1%, Hang Seng HSI of Hong Kong,
it lost 0.9%, while Kospi of South Korea advanced 1.1%. The markets in China were closed for holidays.
.
