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U.S. stock-index futures on Monday were poised for their worst day since October, as investors focused on the emergence of a fast-spreading variant of the strain of coronavirus that causes COVID-19, overshadowing optimism from news over the weekend that U.S. lawmakers agreed on a pandemic-relief deal.
On Christmas week, investors will also look toward the first day of trade for Tesla Inc.. The stock, which officially entered the S&P 500 on Friday, accounts for 1% of the broad-market index at its market value of over $650 billion.
How are stock benchmarks performing?
- Futures for Dow Jones Industrial Average YM00, -1.43% YMH21, -1.43% were down 479 points, or 1.6%, to reach 29,634, which would represent the worst day for the index since Oct. 28, FactSet data show.
- S&P 500 index futures ES00, -1.62% ESH21, -1.62% traded 66.20 points, or 1.8%, lower at 3,640.
- Nasdaq-100 futures NQ00, -1.08% NQH21, -1.08% retreated 140 points to reach 12,570.50, a drop of 1.1%.
On Friday, the stock market closed higher for the week:
- The Dow DJIA, -0.41% posted a weekly gain of 0.4%
- The S&P 500 index SPX, -0.35% rose 1.3%
- The Nasdaq Composite Index COMP, -0.07% closed out the week 3.1% higher
What’s driving the market?
Market participants started Christmas week trade contending with reports from Britain and South Africa of a new strain of coronavirus that has so far caused parts of London to implement tighter lockdown and social-distancing procedures. In addition, governments of European Union nations instituted restrictions on inbound flights from the U.K.
The sharp pullback in equities comes even as experts warn against overreacting and note that no evidence indicates that the variant is a more virulent strain of COVID-19, even if it is more contagious.
News of the virus’s evolution also comes despite an expected vote on a fresh fiscal spending bill that is paired with fresh aid for out-of-work Americans and businesses that have been devastated by the COVID-19 pandemic.
See: What could rattle markets in 2021, even as vaccines are rolling out
Over the weekend, Senate Majority Leader Mitch McConnell, R-Ky., said a deal had been reached on an almost $900 billion coronavirus relief package and a vote on the bill is set for later Monday.
“Make no mistake about it, this agreement is far from perfect. But it will deliver emergency relief to a nation in the throes of a genuine emergency,” said Senate Democratic Leader Chuck Schumer.
Peter Cardillo, chief market economist at Spartan Capital Securities said that the “markets decline has [nothing] to do with the long-awaited stimulus package agreement struck by lawmakers, but rather the run-away virus situation in Great Britain and Europe’s new travel restrictions.”
Meanwhile, markets are watching for the first trading day for Tesla Inc. TSLA, +5.96% as a member of the S&P 500 index, marking one of the largest and, perhaps, volatile members to enter the broad-market index.
Investors saw some second-tier economic data. The Chicago Federal Reserve’s gauge of national economic activity declined to 0.27 in November from 1.01 in October.
Which companies are in focus?
- Shares of Monmouth Real Estate Investment Corp. MNR, -0.53% surged 5.4% in premarket trading Monday, after investment management firm Blackwells Capital LLC said it made an unsolicited bid to buy Monmouth.
- CVS Health Corp. CVS said Monday that it will begin COVID-19 vaccinations at long-term health facilities across the country.
- Tesla Inc. TSLA, +5.96% shares were down over 4% before the opening bell.
What are other markets doing?
- In Asia, the Shanghai Composite SHCOMP rose 0.8%, Hong Kong’s Hang Seng Index HSI lost 0.7% and Japan’s Nikkei 225 NIK shed 0.2%.
- In Europe, the Stoxx 600 Europe SXXP, was 2.8% lower, while London’s FTSE 100 stock index UKX slumped 2.7%.
- The 10-year Treasury note yield TMUBMUSD10Y fell 4.8 basis points to 0.900%. Yields and prices move in opposite directions.
- Oil futures were lower, with the U.S. benchmark CL.1 down 4.4%.
- Gold futures for February delivery GCG21 fell 0.5%.
