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U.S. stock futures edged slightly lower early Thursday, retreating after the S&P 500 and the Nasdaq booked all-time closing highs in the previous session.
Although markets have been heartened by daily reports of a slowing rate of the spread of COVID-19, the infectious disease that originated in Wuhan last year, deaths and cases of the disease outside of China may be sparking some anxiety.
How did benchmarks perform?
Futures for the Dow Jones Industrial Average YMH20, -0.19% were down 62 points, or 0.2%, at 29,276, those for the S&P 500 index ESH20, -0.22% were off 6.70 points, or 0.2%, at 3,380, while Nasdaq-100 futures NQH20, -0.24% declined 20.25 points to reach 9,713.50, a decline of 0.2%.
On Wednesday, the Dow DJIA, +0.40% advanced 115.84 points, or 0.4%, to 29,348.03. The S&P 500 SPX, +0.47% rose 15.86 points, or 0.5%, to end at 3,386.15, marking a record finish. The Nasdaq Composite COMP, +0.87% added 84.44 points, or 0.9%, to end the session at a record at 9,817.18, its second all-time closing high in a row.
What drove the market?
Stock markets appeared soft early Thursday, with some attributing the lack of buying conviction due to a recent round of records produced on Wednesday and news of deaths globally from the spread of the deadly infectious disease.
A report from South Korea’s Yonhap News Agency says COVID-19 has claimed its first live, though the Korea Centers for Disease Control and Prevention hasn’t yet provided details. The mayor of the South Korean city of Daegu urged its 2.5 million people to refrain from going outside, according to the Associated Press. Reports indicate that cases of COVID-19 in South Korea have more than doubled to 104 in a day and with 35 additional cases cropping up in Daegu on Thursday.
Japan also reported that two elderly passengers from a quarantined ship that had been hospitalized due to infectious disease have died, according to the country’s health ministry.
For its part, the People’s Bank of China cut its benchmark one-year loan prime rate by 10 basis points, and the five-year loan prime rate by 5 basis points as part of its efforts to curtail harm from the outbreak The disease from coronavirus has infected nearly 75,000, and claimed more than 2,100 lives in China., according to the country’s National Health Commission.
Goldman Sachs, chief global equity strategist Peter Oppenheimer said that the chances for a correction or pullback were rising due to the spread of the contagion out of Asia. “In the nearer term…we believe the greater risk is that the impact of the coronavirus on earnings may well be underestimated in current stock prices, suggesting that the risks of a correction are high,” the strategists said.
Still, investors may be willing to continue pushing stocks to new heights on hope for easy-money policies from the Federal Reserve and central banks globally.
“We think today’s pre- market softness is technical and is not likely to derail another mixed to positive session,” said Peter Cardillo, chief market economist, in a Thursday research note.
Looking ahead, investors will be watching for U.S. economic reports on the number of people filling for unemployment benefits at 8:30 a.m. Eastern Time, while a report on regional activity in the Philadelphia area, the Philadelphia Fed Business Outlook Survey, is due at the same time.
Which stocks were in focus?
Morgan Stanley MS, +1.42% is set to buy E-TRADE Financial Corp. ETFC, +2.60% in an all-stock deal valued at $13 billion, according to the Wall Street Journal. Shares of E-Trade surged 25%, while those for Morgan Stanley fell nearly 5% in premarket action.
Shares of L Brands Inc. LB, +0.00% were down 7% premarket after reports that it was selling Victoria’s Secret to private equity.
Six Flags Entertainment Corp. SIX, -1.04% shares were down more than 18% before the opening bell after the theme-park operator slashed its dividend.
How are other assets performing?
The price of a barrel of West Texas Intermediate crude for March delivery CLH20, +0.92% rose 0.8% at $53.92 a barrel on the New York Mercantile Exchange.
Gold for April delivery GCJ20, +0.52% was on pace for a sixth straight gain, rising 0.6%, to trade at 1,620.70 an ounce, extending its climb above the psychologically important level at $1,600.
The U.S. dollar DXY, +0.17% was up 0.2% against a basket of rival currencies at 99.62.
The benchmark U.S. 10-year Treasury note TMUBMUSD10Y, -1.30% was down 2.8 basis points at 1.54%. Bond yields fall when prices rise.
In Europe, the Stoxx Europe 600 SXXP, -0.44% traded 0.4% lower, while the FTSE 100 UKX, -0.04% traded flat but held in positive territory.
Trade was mixed in Asia overnight, the China CSI 300 000300, +2.30% rose 2.3%, Hong Kong’s Hang Seng Index HSI, -0.17% fell 0.2%, while the Shanghai Composite SHCOMP, +1.84% advanced 1.8%. Japan’s Nikkei NIK, +0.34% advanced 0.3%, while South Korea’s Kospi 180721, -0.67% sank 0.7%.
