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U.S. stock-index futures on Monday tumbled to start the week amid growing evidence of a resurgence of the deadly COVID-19 pandemic in parts of the world.
How are benchmarks faring?
Futures for the Dow Jones Industrial Average YM00, -1.81% YMM20, -1.79% plunged 538 points, or 2.1%, at 24,860; the S&P 500 index ES00, -1.56% ESM20, -1.55% dropped 53.20 points, or 1.8%, at 2,970.50; those for the Nasdaq-100 index NQ00, -1.13% NQM20, -1.14% declined 123.25 points, or 1.3%, at 9,509.
On Friday, the Dow DJIA, +1.90% gained 477.37 points, or 1.9%, to close at 25,605.54. The S&P 500 index SPX, +1.30% added 39.21 points, or 1.3%, at 3.041.31. The Nasdaq Composite Index COMP, +1.01% climbed 96.08 points, or 1%, to 9,588.81.
For the week, the Dow lost 5.55%, the S&P 500 fell 4.8%, and the Nasdaq was off 2.33%, marked its steepest weekly fall since the period ended March 20, according to Dow Jones Market Data.
What’s driving the market?
Markets are on edge on Monday as growing fears that the disease derived from the novel strain of coronavirus is re-emerging, undercutting the bullish mood on Wall Street.
Beijing closed the city’s largest fruit and vegetable supply center, Xinfadi market, after scores of people tested positive for COVID-19, Bloomberg News reported. China on June 13 recorded its largest daily increase in cases since mid-April, Bloomberg reported, citing National Health Commission data on Sunday.
Meanwhile, increases in infections in Florida, Texas have raised fears about the success of efforts to gradually reopen the U.S. economy, which has been attempted a phased restart of business activity in all 50 states. Reuters reported on Sunday that Alaska, Arizona, Arkansas, California, Florida, North Carolina, Oklahoma and South Carolina all had record numbers of new cases in the past three days.
Confirmed coronavirus cases in the U.S. are at around 2.1 million with nearly 116,000 lives lost, according to data compiled by Johns Hopkins University. Nearly 8 million people have been infected with COVID-19 globally and the disease has claimed 434,000 lives, the data show.
Dallas Fed President Robert Kaplan said Sunday that public health procedures to combat the coronavirus were just as important as government funding for the nascent economic recovery and that, to date, the efforts to reduce coronavirus infections have been “uneven.”
“The extent we do that well will determine how quickly we recover. We’ll grow faster if we do those things well,” Kaplan said during an interview with CBS’s “Face the Nation.” “And right now, it’s relatively uneven.”
Meanwhile, White House economic adviser Larry Kudlow on Sunday played down the increase in coronavirus cases and said the country “has got to open.” In an interview with CNN’s “State of the Union, ”Kudlow attributed the rise of new cases seen in a number of states to an increase in testing.
Worries about a resurgence of coronavirus has forced bullish investors to reassess stock-market valuations that have risen rapidly since the depths of the coronavirus-induced selloff in late March.
“Our sense is that last week’s selloff is a signal that concerns about the outlook are rising; however, expectations haven’t come close being realistically reset,” wrote Wolfe Research analysts, including Chris Senyek, Chip Miller and Adam Calingasan in a Monday research note.
Looking ahead, investors are awaiting a report on economic activity in the New York region for June, the Empire State index, due at 8:30 a.m. Eastern Time. The report last month came in minus 48.5, with a reading below 50 indicating contraction.
