Friday October 2nd


Dow futures fall 400 points after Trump says he tested positive for coronavirus

U.S. stock index futures dropped Friday after President Donald Trump and first lady Melania Trump tested positive for coronavirus. Futures tied to the Dow Jones Industrial Average lost 400 points, or 1.4%. The move indicated an opening loss of about 410 points. S&P 500 futures fell 1.4%. Nasdaq 100 futures declined 2.0%. The president’s diagnosis added more uncertainty to the election, an event that was already weighing on the market and keeping traders on edge as they attempted to evaluate the possible outcomes. Shares of stocks tied to the economy reopening fell in premarket trading as the news highlighted the risk of a second wave of the coronavirus and raised fears that maybe lawmakers would slow the pace at which they relaxed coronavirus measures. Investors will “debate the implications this has for stimulus, reopening, and the election,” wrote Vital Knowledge’s Adam Crisafulli in a note. “Politically speaking, the Trump diagnosis (like the debate) is affirming and likely cements Biden’s poll lead.” Vice President Mike Pence and second lady Karen Pence have both tested negative for the coronavirus, Pence’s spokesman said Friday. Futures pared losses slightly following the announcement. Treasury Secretary Steven Mnuchin has also tested negative, the Treasury’s assistant secretary for public affairs said Friday. The Trump tweet initially knocked down Dow futures about 500 points in overnight trading, and the contracts were off their worst levels as traders digested the news. Shares of cruise lines and airlines were the biggest losers in premarket trading. Carnival and Norwegian Cruise Line fell 5% each. American Airlines and United Airlines both lost more than 4%. “It really brings into stark reality that we are potentially going into … a second wave,” said Jeff Henriksen, co-founder and CEO of Thorpe Abbotts Capital, to CNBC’s “Squawk Box Europe.”  “President Trump getting this really highlights that in a way that I think it will focus attention back on the virus and the effects it will have.” Technology shares also declined in premarket trading with Apple, Amazon, Microsoft and Facebook all losing at least 2%. Tech stocks could come under pressure under a Democratic sweep scenario if it leads to higher tax rates and tighter regulations, many strategists have said. Also weighing on the sentiment was a worse-than-expected September jobs report. Nonfarm payroll rose by 661,000 in September, the Labor Department said Friday in the final jobs report before the November election. Economists surveyed by Dow Jones expected a jobs gain of 800,000. The unemployment rate fell to 7.9% last month. Meanwhile, traders were watching the status of stimulus negotiations between Democrats and Republicans. The House passed the $2.2 trillion Democratic coronavirus stimulus bill Thursday night, but Republicans oppose this package. House Speaker Nancy Pelosi and Mnuchin have agreed to continue to have talks on a bipartisan agreement. Asian shares were mixed Friday in thin holiday trading, with markets in South Korea, Shanghai and Hong Kong closed. The Nikkei 225 index NIK, -0.66% shed strong early gains to edge 0.2% higher as the Tokyo Stock Exchange resumed trading after an all day outage Thursday due to a technical failure. Reports that the Japanese government is preparing new stimulus measures to help the economy recover from a prolonged downturn worsened by the coronavirus pandemic provided only a temporary lift. The sell-off in oil prices intensified as Trump’s coronavirus news added to the industry’s demand concerns. West Texas Intermediate crude, the U.S. oil benchmark, slid 4% to $37.10 per barrel on Friday. Stocks have staged a historic rebound since the economic shutdown sent stocks tumbling in March. But the major averages all finished September lower, snapping a five-month win streak, as doubts emerge about the pace and breadth of the recovery. Gold ticked higher on Friday and was on course for its best week in nearly two months as news of U.S. President Donald Trump’s positive test for COVID-19 sent investors scurrying for safe-haven assets. Spot gold edged up 0.1% to $1,907.22 an ounce, reversing losses from early Asian trade to climb back above $1,900. U.S. gold futures eased by 0.1% to $1,914.70. Bullion has gained 2.6% this week, heading for its biggest weekly percentage rise since early August.