Tuesday July 7th

7-07-2020

Stock futures fall following Monday’s strong rally, tech and airline shares decline

U.S. stock index futures pulled back in early trading Tuesday after a solid rally on Wall Street to start the week. Futures on the Dow Jones Industrial Average fell 261 points, or just under 1%. The move indicated an opening drop of 240 points. S&P 500 futures lost 0.8%. Nasdaq-100 futures declined 0.5%. There was not a single major factor driving markets but here’s what traders were watching Tuesday morning: Technology shares were weak in premarket trading a day after the Nasdaq Composite vaulted higher to an all-time high. The move was led by stocks such as Amazon, which hit $3,000 for the first time. Shares of Amazon fell by 0.3% in premarket trading Tuesday. Shares of Apple and Microsoft were also slightly lower as investors took some money off the table. Stocks tied to the economy reopening from the coronavirus shutdowns were lower in the premarket. Norwegian Cruise Line and Carnival Corp were lower by about 3%. American Airlines and United Airlines fell more than 2%. Atlanta Federal Reserve President Raphael Bostic told The Financial Times the U.S. economic recovery will be “bumpier” as coronavirus cases continue to rise. On the positive side, the U.S. government awarded drugmaker Novavax a $1.6 billion contract to develop a coronavirus vaccine, the biggest amount yet granted under the White House’s “Operation Warp Speed.” Novavax shares were up 45% in premarket trading. Futures traded slightly off their lows when the news hit Tuesday morning. Tuesday’s action followed a strong day on Wall Street that saw the Dow jumping more than 450 points. The S&P 500 gained 1.5% on Monday for its fifth straight positive session, while the Nasdaq Composite notched the biggest gain, rising 2.2%. On Monday, Amazon surged 5.7%. Netflix jumped 3.5% to hit a record high, while Apple, Microsoft, Google-parent Alphabet and Facebook all gained at least 2% each on Monday. The market continued to shrug off a continuous rise in coronavirus cases across the U.S. The number of people hospitalized with Covid-19 grew by 5% or more Sunday in 23 states, including Texas, which reported a record of more than 8,000 hospitalizations on Sunday. California Gov. Gavin Newsom on Monday asked six additional counties to close their indoor businesses. “While we expect continued volatility, we think there are grounds for optimism that economies and markets can weather the recent acceleration in infections,” Mark Haefele, chief investment officer at UBS, said in a note. “There are signs that healthcare systems are coping better with COVID-19, reducing the need for restrictions on freedom of movement. Economic data continues to point to resilience.” The Labor Department will release the May figure for job openings on Tuesday at 10 a.m. ET. Economists polled by Dow Jones expect the total vacancies to drop to 4.5 million in May from 5.05 million in April, which was the lowest total since December 2014. The government’s Job Openings and Labor Turnover Survey is a month behind the more closely followed nonfarm payrolls report, which showed a surge of 4.8 million in June and a 2.7 million jump in May. Stocks in Asia Pacific were mixed on Tuesday as the Reserve Bank of Australia kept its policy settings on hold. Stocks in mainland China continued to lead gains among the region’s major markets for a second day after Monday’s blockbuster gains. The Shenzhen component jumped 1.717% to close at around 13,163.98 while the Shanghai composite rose 0.37% to about 3,345.34. Hong Kong’s Hang Seng index, on the other hand, fell 1.08%, as of its final hour of trading. Elsewhere, Japan’s Nikkei 225 slipped 0.44% to close at 22,614.69 while the Topix index shed 0.34% to end its trading day at 1,571.71. South Korea’s Kospi dropped 1.09% to close at 2,164.17. Oil prices fell on Tuesday amid concerns that a surge in new coronavirus cases, especially in the United States, will hamper any recovery in fuel demand. Brent crude futures declined by 44 cents, or 1.02%, to $42.66, after hitting a high of $43.19. West Texas Intermediate crude futures fell 53 cents, or 1.3%, to $40.10 a barrel, after a high of $40.79. Gold fell on Tuesday in the face of competition from safe haven inflows into the dollar as COVID-19 cases increased globally and investors booked profits following bullion’s rally to a near eight-year peak. Spot gold fell 0.4% to $1,776.43 per ounce. It earlier touched a high of $1,786.91, $2.05 shy of Wednesday’s near eight-year peak of $1,788.96. U.S. gold futures fell 0.5% to $1,784.00 per ounce.