Dow prepares to fight for altitude after the biggest loss in 2 weeks, in the middle of a day filled with economic reports and bank stress tests

The actions of EE. USA They are trading lower on Thursday after major benchmarks set for their worst one-day drop since June 11, amid growing signs that COVID-19 cases are accelerating, snarling efforts to reopen various states and threatening the economy’s ability to back down. deadly outbreak.

Investors will face a barrage of economic updates, including a report on weekly jobless claims, a final GDP reading, and an update on the health of the country’s largest banks, which will come after Thursday’s close.

How are the benchmarks working?

Futures for the Dow Jones Industrial Average YM00,
The S&P 500 ES00 index fell 138 points, or 0.5%, to 25,262,
decreased 12.25 points, or 0.4%, to 3,037.25; while the Nasdaq-100 NQ00 futures,
they were blinking around the neutral line at 10,010.

On Wednesday, the Dow DJIA,
shed 710.16 points, or 2.7%, ending at 25,445.94. The S&P 500 SPX,
It fell 80.93 points, or 2.6%, to end at 3.0501.33. The Nasdaq COMP Compound,
it gave up 222.20 points, or 2.2%, ending at 9,909.17, one day after reserving a new closing record. All three indices recorded their worst day since June 11.

What is driving the market?

The United States recorded a total of 34,700 recently confirmed COVID-19 cases, the highest level since late April, the Associated Press reported, using data compiled by Johns Hopkins University.

The resurgence of the deadly disease will delay the restart of companies that have closed due to the epidemic. Investors have struggled to understand how an economic rally can come amid a resurgence of the viral outbreak.

On Wednesday, Apple Inc. said it would close seven stories in the Houston area after a sharp increase in cases, after it closed some places in Florida, Arizona, North Carolina and South Carolina last week, according to the reports.

Walt Disney Co. postponed the reopening of California’s theme parks, including Disneyland, which was slated to reopen on July 17.

New York, New Jersey and Connecticut announced 14-day quarantines on Wednesday for visitors from states with high rates of COVID-19 infection. The “travel notice,” which affects residents of nine states, underscores concerns about the pace of resumption of business activity after the blockades imposed to contain the spread of the pandemic.

Still, it’s unusual for the market to seem freshly rocked by an increase in the cases that should be expected in a highly infectious disease. Sebastien Galy, senior macro strategist at Nordea Asset Management, says it seems illogical.

“The arrogant answer is that the market is somewhat flawed in its logic,” he wrote in a research note on Thursday. “The standard economic answer is that it is about resolving risk over time (non-separable preferences) like a billiard ball hitting on the first hit. It is just difficult to understand complex interactions (behavior explanation), ”he said.

Investors continue to have a better idea of ​​the economic cost of the pandemic.

In the latest data, which will be released at 8:30 am ET on Thursday, for the week ending June 20, economists surveyed by MarketWatch predict that new jobless claims will drop slightly to 1.38 million.

Financial firms may be in focus during the session ahead of what is expected to be a closely watched report on the health of the banking sector by the Federal Reserve. The so-called bank stress test has been carried out at the country’s largest financial institutions annually since 2009 after the 2007-2008 financial crisis.

The Fed has said that banks entered the crisis in a solid position, but analysts believe that the duration of the pandemic could erode the balance sheets of some institutions as credit losses increase, a point that investors will be watching. That report is not expected to call individual finances, but to broadly discuss the sector.

Last week, Fed Vice President Randal Quarles said the regulator asked banks to refrain from discussing test results until June 29 “to provide a more orderly dissemination of the information to the public.”

Meanwhile, data for the session also includes the third and final reading of first-quarter gross domestic product, the official health scorecard of the US economy, which is expected to show that the economy contracted at an annualized rate. 5%, according to consensus estimates of economists surveyed by Econoday.

A report on orders for durable goods, or durable goods, is scheduled for May at the same time as claims, as is an advance report on international trade for May.

Fed speakers for the day include Dallas Fed President Robert Kaplan at 9:30 am, Atlanta Fed President Raphael Bostic at 11 am, and Loretta Mester, Fed President of Cleveland at 12 pm Kaplan and Mester are voting members of the Federal Open Market Committee this year.

What actions are in focus?
  • Darden DRI Restaurants,
    the operator of Olive Garden and LongHorn Steakhouse, said that first-quarter sales were 70% of sales from the previous year, simply did not meet analyst expectations, but also said that 91% of its restaurants were open with some capacity as of June 22. First-quarter sales of $ 1.27 billion just exceeded analyst expectations of $ 1.26 billion. Shares fell 1.3% in premarket trading.

  • Rite Aid Corp. RAD
    It is slated to report its quarterly results before Thursday’s opening bell.

  • McCormick & Co. Inc. MKC
    He was also scheduled to publish his results before the opening.

  • Nike Inc. NKE
    is scheduled to report results after Thursday’s close.

  • Walt Disney Co. share DIS,
    It may be in focus after the entertainment and theme park giant said it was delaying the reopening of its California theme parks, including Disneyland, which was slated to begin reopening on July 17.

How are other assets working?

West Texas US Intermediate Crude CLQ20,
fell 45 cents or 1.2% to $ 37.56 a barrel on the New York Mercantile Exchange. In precious metals, gold futures are trading lower, with the August GCM20 contact,
, fell $ 3.90 or 0.2% to $ 1,761.90 an ounce, two days after reaching an eight-year high.

The 10-year Treasury note yields TMUBMUSD10Y,
They fell 1 basis point to 0.668% as inflows to refuge assets continue. Bond prices move inversely to yields.

The dollar rose 0.3% against a basket of its main rivals, based on the negotiation of the ICE US Dollar Index DXY,
+ 0.42%

In global equities, the Stoxx Europe 600 SXXP Index,
+ 0.01%
It was approximately 1 point higher, at 358.21.

In the Asian markets, the Japanese Nikkei NIK,
fell 1.2%, and Hang Seng HSI of Hong Kong,
lost 0.5%