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U.S. stock-indexes on Thursday were likely to open mixed, with investors facing a barrage of economic reports and a parade of Federal Reserve speakers, headlined by Chairman Jerome Powell. A resurgence of the COVID-19 pandemic though is also drawing the attention of investors, providing some cause for caution.
How are stock benchmarks performing?
Futures for the Dow Jones Industrial Average YMZ20, -0.81% YM00, -0.81% were off 151 points, or 0.5%, at 29.160; those for the S&P 500 index ESZ20, -0.50% ES00, -0.50% declined 5.60 points to reach 3,562.25, a drop of 0.2%; while Nasdaq-100 futures NQZ20, +0.10% NQ00, +0.10% gained 55.75 points, or 0.5%, at 11.941.25.
On Wednesday, the Dow DJIA, -0.07% ended lower by 23.29 points, or 0.1%, at 29,339.54, snapping a 2-day win streak. The S&P 500 index SPX, +0.76% advanced 27.17 points to close at 3,572.72, notching a gain of 0.8%, its second-highest close ever. The Nasdaq Composite Index COMP, +2.01% surged 232.57 points, or 2%, to finish at 11,786.43, snapping its 2-day losing streak.
What’s driving the market?
Hopes for a vaccine against the coronavirus is being pit against the near-term reality of a significant rise in cases and hospitalizations in parts of the U.S. which has triggered the reimplementation of fresh social-distancing measures that could endanger a tepid economic rebound.
The Wall Street Journal, citing the Covid Tracking project, reported that new U.S. cases and hospitalizations both set records, respectively topping 144,000 and 65,000 on Wednesday.
Indiana saw a single-day rise of more than 5,000 cases for the first time, according to data aggregated by Johns Hopkins University. Other states recorded all-time highs, including Illinois, North Carolina, Colorado, Kentucky, Arkansas, Idaho, New Mexico and West Virginia. In the past week, the U.S. has averaged 128,081 cases a day, up 69% from the average two weeks ago and cases are rising in 49 states and territories
The resurgence of the pandemic has prompted a number of states to reimpose restrictions on consumer and business activity. In New York, Gov. Andrew Cuomo announced that bars and restaurants with state liquor licenses must close at 10 p.m., and said indoor gatherings must be limited to 10 people, as cases in the state reached the highest level since April, while the positive rate of infection approached a 3% threshold that would force schools to shut down.
Against that backdrop, investors appear ready to revert to a trading strategy that has thus far worked this year: buy large-capitalization technology stocks that benefit from the stay-at-home trend.
The move to return to the tech-heavy Nasdaq Composite and Nasdaq-100 indexes NDX, +2.31% comes despite positive vaccine news on Monday from partners Pfizer and BioNTech that indicated a Phase 3 study of an experimental remedy for COVID-19 had 90% efficacy, emboldening buying in stocks that have been beaten down during the worst of the pandemic. The week’s reversion to buying growth stocks may dash some hopes for a rotation into so-called value stocks.
Looking ahead, investors are awaiting a gauge of U.S. inflation from the consumer-price index and a weekly jobless benefit claims. Both reports are due at 8:30 a.m. Eastern Time.
Comments from Powell also will be closely followed as the Fed Chairman speaks on a panel with other central bankers Thursday during an online forum.
