Stock Futures Waver On Rising Covid-19 Cases
April 21 2021 - 5:36AM
Dow Jones News
By Caitlin Ostroff
U.S. stock futures wobbled Wednesday as an increase in global
Covid-19 infection levels led to concerns about the pace of
economic recovery.
Futures tied to the S&P 500 and the Dow Jones Industrial
Average wavered between gains and losses after two straight days of
declines. Technology-heavy Nasdaq-100 futures slid 0.3%.
A new wave of Covid-19 infections is sweeping through a number
of countries including India and Japan, raising the prospect of
fresh hurdles to the anticipated global economic rebound. Health
authorities are also warning that new variants may emerge that are
resistant to the existing batch of coronavirus vaccines. Given
those concerns, investors are putting the brakes to what has been a
furious rally in stocks in recent weeks, leaving the major indexes
hovering near record highs.
"There are still risks in this market, particularly as it
relates to the vaccine rollout and virus mutations," said Shoqat
Bunglawala, head of international multiasset investments at Goldman
Sachs Asset Management. "We're still likely to be in an environment
with some volatility."
Investors are also closely monitoring corporate earnings to see
if the current valuations of expensive stocks can be justified.
Verizon Communications and NextEra Energy are among a string of
companies scheduled to report quarterly results before the market
opens. Chipotle Mexican Grill will post earnings after the New York
closing bell.
"We expect earnings to surprise on the upside, but the risks are
asymmetric. In an environment where markets are at record highs,
any company that doesn't deliver is really punished," said Luca
Paolini, chief strategist at Pictet Asset Management. "Over the
next few months the direction of earnings will determine the
direction of the market."
The retreat in U.S. stocks this week is simply a "normal pause"
in a bull market, with investors taking the opportunity to book
profits and reassess their risk appetite, Mr. Paolini said. "As
long as the U.S. economy is strong, it's not really worth the risk
of betting against the equity market."
Ahead of the market open, shares in Netflix fell almost 8% after
the streaming giant said subscriber growth for the first quarter
was weaker than expected.
In bond markets, the 10-year U.S. Treasury yield edged up to
1.575%, from 1.562% on Tuesday. Yields rise as prices fall.
Overseas, the pan-continental Stoxx Europe 600 climbed 0.5%
after its biggest one-day drop since late December.
In Asia, most major stock indexes closed lower. Japan's Nikkei
225 fell 2%, while Hong Kong's Hang Seng declined 1.8%. The
Shanghai Composite Index ended the day relatively flat.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
April 21, 2021 05:21 ET (09:21 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.