U.S. Stock Futures Slip as Investors Weigh Risks
September 24 2020 - 9:06AM
Dow Jones News
By Anna Hirtenstein
U.S. stock futures slipped Thursday as investors weighed
multiple risk factors after the number of Americans applying for
new unemployment benefits rose slightly, holding steady at
historically high levels.
Futures tied to the S&P 500 fell 0.6%, pointing to a further
decline in U.S. equities after the opening bell. The broad market
gauge dropped 2.4% Wednesday to its lowest level in almost two
months after hopes for an additional coronavirus-spending package
from the government dimmed.
Markets have grown jittery as a confluence of risk-factors came
to the fore. Coronavirus infections continue to rise in many parts
of the world, including the western U.S. The presidential election
campaigning is fueling volatility: President Trump on Wednesday
wouldn't commit to a peaceful transfer of power after the November
vote. He predicted that the outcome would be decided by the Supreme
Court, a reason he wants to quickly fill the vacancy left by the
death of Justice Ruth Bader Ginsburg.
Federal Reserve officials on Wednesday stepped up calls for
additional fiscal relief to bolster the economy. Chairman Jerome
Powell and his colleagues said Congress and the White House, more
than the Fed, had the power to hasten a faster recovery.
"America sneezes and the rest of the world catches a cold: if
you're being told that the world's largest economy will not recover
without stimulus and they can't agree on a stimulus, then that has
to be a negative piece of news," said Tony Yarrow, a multiasset
fund manager at Wise Funds. "The mood among investors is extremely
pessimistic at the moment."
Mr. Powell is scheduled to offer congressional testimony in
Capitol Hill for a third day this week, and will speak at 10 a.m.
ET. He is expected to give an overview of the economy and monetary
policy, which could provide clues into the central bank's actions
going forward.
In bond markets, the yield on the benchmark 10-year Treasury
edged down to 0.665%, from 0.676% on Wednesday.
The latest data on new jobless claims for the week ended Sept.
18 showed that the number of workers applying for jobless benefits
rose to 870,000, compared with 866,000 last week.
"While we saw a strong rebound in the labor market during the
summer, now we're seeing a slower recovery," said Valentin Bissat,
an economist at Mirabaud Asset Management. "I think we'll see those
claims remain pretty stable."
Daily new coronavirus cases in the U.S., which began to trend
downward in mid-July, have also been going up since mid-September
in a worrying sign for investors.
The timeline for a coronavirus vaccine being widely available
also remains unclear: Dr. Anthony Fauci, the nation's top
infectious-disease expert, expects to see data from Phase 3
clinical trials of some candidates indicating whether the vaccines
are safe and effective by "November or December" of this year.
In contrast, Mr. Trump has repeatedly claimed that a vaccine
will be available before the early November elections. On
Wednesday, he appeared to criticize forthcoming Food and Drug
Administration guidelines being developed around the release of a
vaccine, adding to concerns that the health issue was being
politicized.
Overseas, the pan-continental Stoxx Europe 600 dropped 0.6% as
investors weighed the prospect of stringent measures being
introduced in countries such as Germany, France and the U.K.
following a rise in infections.
"We all assumed restrictions would be over by September, but it
turns out that we're in September and we're being promised another
six months of dislocation," said Mr. Yarrow. "Everyone's having to
reset their expectations."
In Asia, major benchmark stock indexes closed lower as the
negative sentiment spread overnight. The Shanghai Composite Index
retreated 1.7% and Hong Kong's Hang Seng Index fell 1.8%.
The WSJ Dollar Index, which tracks the greenback against a
basket of currencies, held steady at near its highest level since
July.
Gold extended its decline for the fourth straight day,
retreating 0.4% to trade at $1,860.80, the lowest level since July.
The stronger greenback is weighing on gold because the precious
metal is priced in dollars, making it more expensive, Mr. Bissat
said.
Ahead of the opening bell in New York, Tesla fell 2.6%,
extending its decline after a disappointing corporate presentation
earlier this week stoked investors' concerns that its shares are
overvalued.
Shares of Nikola, the electric-truck maker, plunged 10.6%
premarket. Talks between the startup and several potential
partners, including oil major BP, have reportedly stalled following
allegations that it has misled investors.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
September 24, 2020 08:51 ET (12:51 GMT)
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